Insurance Ecosystem Presentation

Presentation
By Dmitri Kosten
On LinkedIn: https://www.linkedin.com/in/dmitrikosten
BLOCKCHAINTechnology
Transforming the Insurance Industry

AGENDA TOPICS
• BLOCKCHAIN Technology – Transforming the Insurance Industry
• New Market Landscape
• Higher Level of Efficiency – How?
• Self Governance – As Market Force for Competitive Advantage
• DELOITTE “2014 Life Insurance and Annuity Industry Outlook”

BLOCKCHAIN TECHNOLOGY – TRANSFORMING THE INSURANCE INDUSTRY
IBM – New Age of Ecosystems
Gartner – PolicyAdministration Systems Report
Deloitte – 2014 Insurance Industry Outlook
Customers expect
simple sophisticated
experiences
Tech-fueled transformation
is the most likely path to
sustain long term growth
Innovation is occurring in
new areas, often outside the
core policy or new business
process
Do you see the tidal wave?

Business Industry Trends and Drivers
• New Challenges to Business Environment
• Financial Engineering
• Black-Scholes, started in 80’s
• Risk Management – New Discipline
• Market Segmentation
• Explosion of Data Availability
• Behavioral Economics
• Regulatory Changes
• Glass-Steagall/SOX/Dodd - Frank
• FDIC
• Globalization
• New Foreign and Domestic Market Players
Financial
Engineering
Market
Segmentation
Regulatory
Changes
Globalization

Business Industry Trends and Drivers
• New Market Landscape
• Higher Product Sophistication
• Higher Regulatory Compliance
• Higher Competition
Higher Level of Efficiency

Higher Level of Efficiency – HOW?
Eco System – Macro Level (External Operations) Eco Systems – Micro Level (Internal Operations)

Higher Level of Efficiency – HOW?
• Historical Business Demands to IT
• Replace of Manual Processes
• System Integration
• Implementation Methodologies
• Today’s Business Demands to IT
• Speed To Market
• Realignment with Business components
• Industry Standardization

Self-Governance – As Market Force for Competitive Advantage
Current State Future State

“Instead of having ledgers maintained by banks that act
as a record of an individual's transactions, this kind of
open ledger would be viewable by everyone using the
system, and would use an agreed-upon process for
entering transactions into the system”
http://www.reuters.com/article/2015/03/12/us-bitcoin-ibm-
idUSKBN0M82KB20150312
IBM looking at adopting
bitcoin technology
Banking Industry

Information Decentralization
Higher Operational Efficiency

 DELOITTE “2014 Life Insurance and Annuity Industry
Outlook”
 Six focus areas explore industry-wide:
 Market dynamics
 Competitive dynamics
 Tactical trends
 Opportunities within individual firms.
 Four out of Six focus areas outline trends and changes that are
exactly addressed by new system design.
 RemainingTwo focus areas will have broader benefits and will be
strategically prepared for upcoming changes.

 DELOITTE “2014 Life Insurance and Annuity
Industry Outlook”
 Merger and Acquisition expected to rise.
 New Risk Base Capital requirements under various reforms will reduce
excess capital may force small and medium size carriers to sell non-core
block of business.
 New System Design will make M&A to be seamless process
from technology prospective.
BLOCKCHAIN TECHNOLOGY VALUE PROPOSITION

 DELOITTE “2014 Life Insurance and Annuity Industry Outlook”
New System Design will make
M&A process to be seamless
from technology prospective

Outlook”
 Historically lucrative products and target markets are no longer producing
sufficient returns.
 Insurers that use novel approaches and innovative strategies to
cost-effectively bridge the life insurance coverage gap within the
32-to-47-year-old age bracket can potentially appropriate the lion’s
share of this vastly underpenetrated market.”

Outlook”
“..Setting up highly engaging online
communities alone with alone with
interactive easy to navigate multi-
media website could give insurers
cost effective platform to engage
with tech savvy Gen Xers and gain
deeper consumer insight…”
The New platform design will enable
building ecosystems natively while
maintaining privacy by default. This means
ecosystem of policy participants can be
created based on specific criteria.

Outlook”
 One of the keys priorities is PBR compliance and
setting the stage for compliance for upcoming Global
Insurance Capital Standards.

Outlook”
New platform design natively
supports straight through access
and transparency for reinsurance
and regulatory needs.

Outlook”
 Increasingly, Insurance Companies ask Finance for decision
support and strategic advice, prompting transformation initiatives
to evolve the function into an internal business partnering role by
strengthening its link to broader enterprise goal such as product
focus and capital deployment
Proprietary and Confidential: For Deloitte Presentation only on April 9 2015

Outlook”
Insurer will look to bring together financial
and operational data, which often is not
within the current reach of finance.
As result they will also likely need greater
information technology support to produce
the types of data being sought for both
business purposes and regulatory needs.

Outlook”
 “..While carriers should continue to seek bottom line
improvements by squeezing out necessary costs, they should also
be looking to more sustainable efficiency and productivity plays”
 “..In order to achieve more impactful changes they will likely need
to rethink core operating models and how more effectively
leverage key capabilities across the enterprise.”

Outlook”
Carriers will more aggressively
transform their core operating
models to be more responsive,
nimble, and cost effective. Top
management will be challenged to
make strategic investments
particularly when it comes to data
management and distribution.

Outlook”
 As more insurers look to transform their operating environment,
technology investments are moving to the front burner for life
and annuity carriers across entire industry value chain.
 Carriers are considering adaptation of more disruptive
technologies to address increasingly fluid and sophisticated
preferences and expectations on the part of consumers and
intermediaries.

Outlook”
Insurers will consider investments in
enabling technology, as an increase in
volume, velocity, and the variety of
external data may stress sector’s aged and
siloed infrastructure, threatening to
overwhelm the enterprise that have not
yet tackled the primary impediments to
information management.

Outlook”
 Where should Insurers go from there?
The last few years have been particularly difficult for those occupyingC-
suite position in the industry, as more fundamental issues are
threatening not only short-term results on their balance sheets, but the
long term viability of their business model as well.
The question is which carrier will have the vision an ability to proactively
anticipate and adapt to new market realities. Those that do are more
likely not just survive, but to prosper as they reposition themselves
against traditional as well as emerging competitors.

GARTNER REPROT SAYS
• From our review of the vendors, five key trends emerged:
• Many of the heritage vendors are unable to keep up with and evolve to compete with newer market
entrants.
• Innovation is occurring in new areas, often outside the core policy or new business process.
• While solutions are maturing, with new features being added and technical enhancements being
made, most still do not support life insurers' emerging digital needs.
• Many vendors still do not support the product needs of a multiline life insurer. Many focus
exclusively on individual or group, and many lack the support of health-related or work site products.

Insurance Ecosystem Presentation

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