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Disrupt or be disrupted: 2016 EY Sensor Data Survey

To disrupt or to be disrupted? That is the question insurers must address if they are to make the once-futuristic concepts in telematics, wearable tech and real-time risk underwriting into here-and-now operational capabilities. There is a clear and compelling opportunity for insurers to re-engineer the fundamental value proposition to customers through transformative product innovation.

This webcast discussed:
o Customer data security and privacy
o Creating an advanced analytics culture
o Product innovation
o Program management for underwriting, life insurance and claims
o Forming a plan and taking action
o Key findings from our 2016 Sensor Data Survey -

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Disrupt or be disrupted: 2016 EY Sensor Data Survey

  1. 1. Disrupt or be disrupted 2016 EY Sensor Data Survey 16 March 2016
  2. 2. Page 2 Today’s moderator Kevin D. Koenig Global Insurance Analytics & Data Excellence Advisory leader Ernst & Young LLP Steve W. LaValle Principal, Financial Services Advisory Ernst & Young LLP
  3. 3. Page 3 Today’s agenda ► Optimizing and monetizing the collision of sensor data ► Leaders vs. laggards ► The road ahead
  4. 4. Page 4 Today’s presenters Tim Lecam Senior Manager, Global Insurance Practice, Underwriting Ernst & Young LLP (US) Bernard Klein Wassink Principal, Global Insurance Practice, Customer & Growth Ernst & Young LLP (US) Imran Ahmed Partner, Global Advisory Services, Claims Ernst & Young LLP (UK)
  5. 5. Page 5 Overview EY’s 2016 Sensor Data Survey ► First-of-its-kind survey on the impacts of sensor-based technology ► Conducted by EY’s global insurance practice ► Participants in seven countries ► C-suite (75%) ► VP or above (97%) ► 1,782 organizations globally, including 400 insurers Sectors Insurance Banking Electronics Retail Travel Automotive Telecom Key takeaways ► The impact of sensor and emerging technologies on the insurance industry will be extensive, profound and lasting ► New mindsets and capabilities, different business models and the integration of new data and technologies are necessary for survival in a changing market
  6. 6. Page 6 Defining “sensor data” Wearable or personal technology, sometimes called “fit tech” Sensors on objects – personal and commercial vehicles and shipping containers Location-based sensors in factories, warehouses, offices and homes – “smart” thermostats, alarms and cameras Geographic information systems and satellites providing geophysical, topographical, climatological and hydrological data
  7. 7. Page 7 Implications and takeaways Direct, unmediated customer relationships may soon become the rule as insurers gain direct access to objective and unfiltered data. Truly individualized relationships will replace generic segmenting and rudimentary targeting of the past. The days of selling just insurance are numbered. 1 2 3
  8. 8. Page 8 Insurers need self-reported data today more than any other industry Insurers are positioned to become much less reliant on agents and customers to provide data.
  9. 9. Page 9 Leaders vs. laggards
  10. 10. Page 10 Customer centricity is not a performance differentiator Most defining centricity 31% 18% 15% 11% 9% 8% 7% 30% 10% 20% 11% 13% 11% 6% Customer Innovation Finance Brand Compliance Self +8 points -5 points -4 points Sales Leaders Laggards Leaders and laggards are comparably customer- and sales-centric
  11. 11. Page 11 Impacts ► Leaders: better differentiation and risk pool management ► Laggards: adverse customer self-selection, lower margins and higher risk Some customers get LESS value Some customers get MORE value 100% Agree 100% AgreeDisagree 66% 42% 18% 22% 46% 69% A new age of personalization and differentiation Impact of new data sources Downselling ► Limited bundling ► Generic offers ► Higher prices for high-risk features Upselling ► Unique bundles ► Tailored offers ► Lower prices for low-risk features Leaders All respondents $ $ Laggards
  12. 12. Page 12 Insurers lag in using insights from new data sources Percentage of respondents, by sector, reporting that their companies can use insights from new data sources to boost customer value InsuranceElectronicsTransportationAutomotive 54% 36%50% 47% 47% 46%47% Retail TelecomBanking/ financial services
  13. 13. Page 13 Auditable assurances that data was used only for the agreed-upon intended purposes Commitment to data protection both now and in the future Benefit improvements through pricing, convenience, safety, offer relevancy or product features Customers will share data when rewards outweigh risks Accountability and added value are more important to customers than control when it comes to sharing data Accountability and added value Control 38% 37% 36% 35% Ability to approve or deny the types of information collected/used and make changes over time Needs to be legal and routine to provide their information Ability to easily understand their information and unilaterally correct errors Ability to permanently delete or mask information at end of relationship Do not believe that customers would share their data 28% 27% 23% 5% 25% % 40 10 20 30 Fully transparent, declarations on how data will be stored and used including for how long
  14. 14. Page 14 Leaders seek more context while laggards optimize status quo Organizational data priorities 1. Improving confidence in the data 2. Protecting the data 3. Reducing cost of data management 4. Ensuring freshness at point-of-use 5. Connecting disparate data sources Shared top priorities 35%20% 35%24% 39%29% 33%24% 30%23% 34%29% 33%28% Integrating external data sources Adding granularity to the data collected today Adhering to governance policies Enabling more business users Reducing complexity of data environment Adding new types of information not collected today Defining data consistently throughout the organization Sorted by difference Leaders Laggards
  15. 15. Page 15 Advanced analytics are common and performed throughout organizations Functions performing advanced analytics Sorted by difference
  16. 16. Page 16 Leaders see opportunities across the board Leaders believe new data sources drive improvements in how they Leaders see 3x“ ” Market and sell 75% Laggards 28% Differentiate value 71% Laggards 27% Engage customers 71% Laggards 27% Set strategy 69% Laggards 23% Work with others 69% Laggards 22% Model and manage risk 70% Laggards 24% more opportunity
  17. 17. Page 17 The road ahead: the action plan for insurers Recognize the profound impacts and transformational nature of sensor data – especially relative to competitive threats. Engage customers to help formulate the right data strategy. Start solving for technology – partner, develop or takeover? Err on the side of share. Move forward or move on. 1 2 3 4 5
  18. 18. Page 18 Further reading To learn more, visit:
  19. 19. Page 19 Further reading Health insurer of the future 2015 Retail Life Insurance and Annuity Executive Survey Global Consumer Insurance Survey 2014 The future of underwriting
  20. 20. Page 20 Thank you!
  21. 21. Page 21 EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit © 2016 EYGM Limited. All Rights Reserved. EYG no. EG0324 ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.