The document discusses how digitization is transforming the insurance industry. It is putting pressure on life/pensions and property/casualty insurers to improve customer experience through digital channels. Customers now expect seamless, personalized experiences through mobile and online access. Insurers need to leverage new technologies like analytics, cloud computing, and the internet of things to meet these rising expectations and compete in the digital era. Data and digitization offer opportunities to better understand customers, price policies dynamically, and automate processes, but insurers must also address challenges of security, regulation and building customer trust.

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Insurance
Market views
Connected world will transform the
industry
Reputation, brand and improving
customer intimacy are top concerns of
insurers
Just 2% of large firms have explicit
cyber cover
Overall auto insurance premiums
expected to be reduced by 25% by
2025
Expected that half of premiums will
have a telematics component by 2025
68% of consumers willing to
download and use an insurance app
Data and analytics empowering the
insurance industry
Auto insurance market being impacted
strongly
The new digital era is putting pressure on
both life and pensions (L&P) and property
and casualty (P&C) insurers. On the L&P
side, digitization is opening up a new
‘online advisor’ space, for example, while
mobile devices have reduced the sales
cycle by giving customer direct access to
brokers and aggregators. Digitization is also
helping agents to understand their clients’
behaviors better which, in turn, allows – and
forces – them to offer a more proactive and
engaging customer experience.
Meanwhile, P&C insurers are fighting to
engage with their personal lines customers
because the insurance policy has become
increasingly commoditized. Purchase
decisions are driven almost entirely by
price. Digitization means customers
have access to more information than
ever before, using social media and price
comparison sites to compare policies,
prices and claims experience.
It also means customers might be ready to
share much more information provided the
insurer proves itself a trusted intermediary.
They will expect to see a real connection
between giving up information and access
to a simpler, more convenient, personalized
and transparent experience. Profitability
will come from insurers’ ability to deliver on
these requirements.
At the end of the day, P&C customers want
quotes and prices when they want them,
fully adapted to their needs and via their
channel of choice alongside access to
help when required to reduce the overall
Insurance, at its very core, is an agreement
between the customer, who needs
protection from an unlikely event or to
Customer
Experience
Business
Reinvention
hassle of dealing with insurance (especially
in the claims process) all the way from
subscription to billing.
Customers across both sectors want
self-service tools for managing their own
insurance and savings needs, particularly
at expiration, when payments are due or
when making additional investments. To
deliver these – and other personalized
tools and services – insurers need a
single view of their customers along with
their customers’ needs and ambitions.
Furthermore, coverage flexibility, simplicity
and transparency are also important.
Personal lines business through mobile
and online channels not only continues
to expand, but is expected to accelerate,
particularly in relation to ‘in the moment’
cover (short-term insurance policies with
by the minute, hour or day coverage) and
standardized P&C policies. Customers will
soon expect to be able to interact with their
provider through mobile, for uploading
photos relating to claims or insurance on
the go (including at the retailer or service
provider), for instance.
Customer experience needs to be mobile
and digital by default. Insurers are, however,
lagging behind when it comes to the
mobile experience. According to various
sources, in 2014 only 30 percent of insurers
had a mobile responsive website and only
a similar percentage had one or more
mobile apps.
Insurers need to employ the personal
finance and sales force automation tools
already available to help them move away
from simply competing on price. These
tools will help them control risks more
effectively and to match the engaging
experience offered by the new market
entrants who will claim market share
if incumbents don’t get closer to their
customers and build the loyalty needed to
reduce churn.
Social media, meanwhile, could potentially
rapidly become insurers’ channel of choice,
either integrating with or virtually replacing
current multi-channel approaches. Insurers
are already exploiting social media for
referrals, particularly related to complex car
or life and savings insurance. They need
to be leveraged for advanced analytics
(to combat fraud, for example), customer
service, product development as well as
many other processes.
Tied agents continue to be a significant
sales channel, playing a key role within the
insurance distribution value chain. This
channel must be integrated and supported
to offer a seamless omni-channel customer
experience and to ensure greater efficiency.
Insurers are, however, feeling tension
between the pressure to disintermediate, a
customer journey that is by essence multi-
channel and the pressure from brokers and
aggregators to stay relevant. A combination
of greater focus and greater efficiency
and coherence is needed, while revisiting
business and operating models that are
progressively tested, but potentially not
evolving fast enough.
Key Market Challenges

2. 111Ascent Look Out
‘‘For all lines of business, the next decade will be defined by increasing
connectivity and growing volumes of data. Business model innovation
will be driven by collaboration across broader ecosystems.’’
Laurent Gibert
Global Insurance
Market Executive
preserve his own and his family’s health or
wealth, and the company, who must have
the right financial assets, reputation and
tools to support the customer during his
whole lifespan. It is, in fact, a matter of long
term strategies.
For all lines of business, the next decade will
be defined by increasing connectivity and
growing volumes of data. Business model
innovation will be driven by collaboration
across broader ecosystems that include,
amongst others, the technology giants
that are driving disruption across many
industries. On the positive side, car,
health and home insurers are already
collaborating with these technology players
to leverage the growing volumes of data
they have available to further enhance and
personalize policies. On the downside, they
could separate insurers from the ownership
of customer relationships.
New players with innovative new business
models and insurance products and
services will emerge, some disrupting
traditional distribution models by offering
customers integrated value propositions
that encourage a healthier lifestyle (Vitality,
Oscar) or help to protect their property
better, for example.
Social (peer-to-peer) insurance is also
increasing. German Friendsurance is five
years’ old while Guevara, a peer-to-peer
car insurance service, has only recently
launched in the UK. Radically integrated
value propositions that combine personal,
family and business lives are also becoming
more commonplace.
Meanwhile, the traditional car insurance
business within the P&C market is shifting
to a new business model based on online
risk coverage. Individual usage based
insurance (UBI) models – where car makers
share relevant driver data gather from their
connected cars with insurance companies
(with drivers’ permission) – are emerging
in new motor insurance products. These
allow insurance companies to offer lower
premiums to safe drivers along with pay-
per-use models.
Furthermore, the emergence of the
connected and autonomous car has
the potential to transform car insurance
further. Companies are thinking about its
implications. It may reduce risk but, even
in the new world, somebody will need
to be held liable if the autonomous car
malfunctions. Premiums may decrease and
shift from individual property to collective
liability insurance or to more commercial
lines cover as ownership shifts from
private individual to fleet or corporate hire
provision.
The combination of sustained period
of low interest rates, which is yielding
low investment returns, and increased
regulation is hurting profitability for L&P
insurance companies, as it is banks. To
increase their top line, L&P companies
need to turn their focus back to driving
profit margins from underwriting and
new product development rather than
investment. That means going back on
the offensive and reaching out to the
customer with the products they need
and desire, by using de-regulation in the
pension markets to come up with new and
innovative retirement plans, for example. At
the same time, L&P companies must focus
on improving operational efficiency to cut
their bottom lines, OPEX in particular, and
capital efficiency through reinvented ERM,
leveraging Big Data and new platforms.
Insurance companies are adopting
technological solutions to automate and
increase the accuracy of the underwriting
process, support variable pricing,
help maximize the efficacy of scarce
underwriting resources and increase
direct sales. But this is not enough. Only by
completely re-engineering their business
processes can they ensure they’re aligned
with best practices and able to adopt more
and more straight through processing
within their environments.
Front office digitization – including
connected devices, self-service and an
omni-channel environment – promises to
give customers secure and high speed
access to the heart of insurance business
systems. It allows customers to manage
their own accounts and interact with the
Operational
Excellence
On the flip side of a lower interest rate
environment, hedge funds and other
alternative sources of capital are becoming
part of the insurance value chain. Driven
by low interest rates, they’re increasingly
providing additional funding options for
insurers and, in doing so, transferring
investment risks outside of the insurance
company.
This business reinvention is happening fast
in an industry not used to drastic change
and will require an ability to change some
key aspects of corporate and industry
culture towards a more open, participative
culture, internally and externally integrating
open innovation and new types of partners.
Insurance

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Insurance
Trust and
Compliance
company when it suits them, on their
preferred channels and in way that is
intuitive and engaging. In addition, it’s
helping insurance companies reduce
capital expenditure and cost while
freeing up personnel so they can focus
on more valuable customer relationship
management and sales tasks.
Back office digitization, on the other hand,
promises to boost returns on investment,
with the greatest value coming from
process automation. By digitizing manual
processes and paper documents, insurers
can increase efficiency and agility while
reducing cost by up to 40 percent.
Documents can be shared more easily
and non-core functions such as IT, human
resources and finance can be moved to
a more efficient and more cost-effective
centralized role.
Those looking anew at their processes and
thinking front to back digitalization will be
the ones reaping the most benefits from
the digital revolution. They will also be most
likely to respond effectively to the digital
disruptors and to customer expectations.
Meanwhile, industry-wide consolidation
is extending demand for the low-cost
business models that are helping
companies across all geographies to
manage their legacy closed block portfolios
more effectively. That consolidation is
also increasing pressure for the greater
‘economy of scale’ that will help companies
gain market share in specific geographies
(particularly in advanced western countries)
and fight against margin reduction. Greater
economy of scale does, however, bring
Insurance companies must take steps to
ensure they’re compliant with intensifying
consumer protection legislation and to
avoid a repeat of the miss-selling that has
dented consumers’ confidence in the
industry. Accelerating information risk
management in the front office will help to
ensure consumer data protection, with the
appropriate ‘touch’ on risk and underwriting
to meet new consumer expectations.
Insurers are increasing their focus on Anti
Money Laundering and Counter Terrorist
Financing legislation in a way that is natural
to banks but new to insurers. New solvency
regulations coming into play across Europe,
for example, mean insurers will have to
screen customers before underwriting their
policies.
When it comes to internal and external
stakeholder information requests, insurers
need to be more efficient in how they
deliver the information wanted. Only then
will they be sure they can respond to the
requests within the timescales required.
Accurate, reliable, consistent and timely
compliance data requires reporting to be
more transparent. Combining information
from diverse, siloed systems will enhance
visibility – particularly in relation to the
reserve and solvency information that
rating agencies need to understand. But
merging data silos to create a single view
of the truth, in real time, will help not only to
address regulation such as Solvency II and
Markets in Financial Instruments Directive ;
it also offers competitive advantage by
allowing insurers to offer more personally
tailored products to the customers that
really need them.
Generation Y consumers are more
prepared than their parents to trade
personal data for financial reward such as
discounts, vouchers or access to services.
Advances in security, data governance and
data usage transparency are needed to
help them stay secure while they do this.
New cyber-risks and the ‘cloudification’ of IT
mean insurance companies need to rapidly
adopt new security technologies to ensure
proper data and consumer protection.
Cyber-risks offer new opportunities too:
cyber-risk insurance.
All in all, building trust especially on how
data is protected and used is absolutely
critical, not only for the obvious sense
of safety but also to allow companies to
continue to play in a world where access to
data is becoming vital at each step of the
insurance value chain.
with it significant challenges, including
outsourcing management, continuous
integration, the closure of entire business
lines and product displacement.

4. 113Ascent Look Out
DevOps
To develop and deliver new products
quickly, cost-effectively and to a high
standard, insurers are adopting a DevOps
approach to software development. By
enhancing collaboration between software
developers and IT operations the DevOps
approach reduces time-to-market and cost
while improving quality.
Distributed analytics
By exploiting data from predictive models
such as weather, insight from social media,
data from geo-positioning systems and a
wealth of broader information sources, the
IoT is allowing insurers to enrich individual
usage based insurance (UBI), tuning it
closer to the needs of the individual.
Distributed analytics allows diverse data
sources to be analyzed together without
the need to first copy the data to a central
location. This impacts everything from
wearables (such as wristbands) right up to
oil rigs.
Key Enablers
5G networks
Customers access cloud services from
wherever they are. Moreover, mobile
solutions combined with a secure and
pervasive 5G networks are extending the
reach of business services, attracting new
customers who prefer self-service tools to
other forms of interaction. These modern
customer service tools significant increase
policyholder satisfaction, while reducing
agent workloads.
Blockchain
Blockchain technology applies as
well to fraud management, payments,
identification, document authentication,
claims management and M2M security
(IoT). It significantly reduces the cost of
performing these activities while improving
security.
Cloud Service Integration
Already on the landscape, cloud computing
has just touched the tip of the iceberg
when it comes to the role it will play in
insurances. Insurance companies are
increasingly hosting their systems in the
cloud, from where they're delivered as
cloud services. Cloud Service Integration
ensures tight integration between all the
different cloud services, from standard
policy underwriting and to claims
processes.
Context-rich systems
Increasingly sophisticated digital advisors
enhance the customer support experience:
the truly omni-channel avatar can engage
seamlessly with the policy-holder through
a multitude of online channels. Behind
the scene context-rich systems combine
intelligence from diverse systems to
proactively anticipate each customer’s
specific needs.
Emerging
Adolescent
Early adoption
Mainstream
2016 2017 2018 2019+
© Atos 2016. All rights reserved.
Sentiment analytics
Mobile first & real-time interfaces
Rules engines
Software-defined
technologies
DevOps
Hybrid cloud
Internet of
Things
Wearable computing
Streaming analytics
Pattern-matching technologies
High performance computing
Web-scale computing
Privacy-enhancing
technologies
Context-rich systems
Robotics / Intelligent automation
5G networks
Distributed analytics
Blockchain
Prescriptive analytics
Virtual assistants
Semantic technologies
Cloud Service Integration
Self-adaptive security
Insurance

5. 114 #AscentLookOut
Insurance
High performance computing
High performance computing allows
insurance companies to take full advantage
of the benefits offered by IoT data.
Models help them anticipate and prevent
catastrophes, eliminating the need to pay
out for damages created by such events.
Hybrid cloud
Private clouds allow insurers to make
resources – both data and applications
– available from anywhere and on any
device. No matter where the customer
engages from or where an employee
or partner is working from, the systems
that they interact with and the data these
systems use will be the same. Hybrid cloud
then allows companies to augment their
own omni-channel services with relevant
third-party services – such as news, hints
and tips or even weather forecasts – further
enhancing the experience.
Internet of Things
A few years from now and the Internet of
Things (IoT) will have transformed not only
the health, motor and home markets but
also commercial lines with its widespread
use of sensor technology, advanced
analytics and new ecosystems.
Mobile first and real-time customer
interfaces
New customer usages require investment
in mobile first and real-time customer
interfaces that link seamlessly with
backend systems.
Pattern-matching technologies
Pattern-matching technologies help
companies leverage the vast volumes
of data available today to identify and
then address unusual behavior patterns,
including potentially fraudulent behaviors.
Prescriptive analytics
This dynamic customer profiling allows
for more sophisticated segmentation that
has improved cross-segment sales and
cut response times for origination and
claims. The prescriptive analytics that can
decipher what customers want even before
they know themselves provides ‘next best
offer’ capabilities.
Privacy-enhancing technologies
As customers share more information
with insurers, insurers must ensure
robust compliance with consumer
protection legislation. Privacy-enhancing
technologies (PET) control disclosure
of data, helping companies to manage
privacy risk by ensuring compliance with
data protection legislation and regulation.
Robotics/intelligent automation
Workplace robotics, as automated virtual
workers, that can be deployed across
unstable architectures or multiple legacy
systems as easily as a human operative
take on a lot of the dull, time sensitive
and repetitive back office tasks at a
much lower cost. 100 per cent auditable
and reliable, they can be deployed with
minimum disruption and, unlike the human
workforce, never make mistakes, work 24/7
and can be programmed for a multitude of
variable tasks.
Rules engines
Resilient and agile frontend tools need
powerful and extremely flexible rules
engines to deliver ultra-personalized
products and pricing.
Insurers are achieving their goals of 100
percent straight through processing
now that core insurance IT systems are
aligned with the best-in-class automatic
process solutions. Business-rules based
configuration that leverages advanced
analytics is allowing standard policy
underwriting and claims processes to
be automated, eliminating manual work
activities at an enterprise scale.
This increases the accuracy of underwriting
decisions, supports variable pricing and
helps insurers to maximize the efficacy
of scarce underwriting resources.
Able to handle multiple product lines
simultaneously, rules-based configuration
is accelerating time-to-market for new
products.
Semantic technologies
Companies are storing both operational
and customer data in private clouds,
providing secure and robust access to
the information they need to improve
efficiency and decision-making as well as
enhance customer experience. Behind the
scenes semantic technologies help their
intelligence systems to understand the
relationships within and across data.
Sentiment analytics
The lifestyle, behavioral and health
data collected from mobile devices
and wearables gives insurers a deeper
understanding of their customers. What’s
more, with social networks now well
integrated into our everyday lives, insurers
are using advanced social media analytics
with its sentiment analytics to enhance
this insight even further.
Software-defined technologies
Cloud native applications allow companies
to take full advantage of web-scale
computing and software-defined
technologies. They allow new products to
be tested and launched within significantly
shortened project lifecycles.
Streaming analytics
Big Data is helping leading insurance
companies outperform their peers. Its
advanced streaming analytics enables
insurers to leverage real-time data, for
example about properties likely to be
affected by weather data for claims
initiation, optimization or prevention. These
dynamic customer profiles signal insurers
moving away from the generic customer
profiles that cater for millions of customers
to individual 360° customer profiling.
Self-adaptive security
While trusted information brokers
provide insurers with the confidence to
share more information with agents, the
dynamic access control enabled by self-
adaptive security and a new generation
of collaborative tools ensures they have
access to the information, systems and
locations they need to access, but only
when they need it.
Virtual assistants
Digital advisors have a vital role to play in
helping insurers avoid scandals such as the
miss-selling saga that dented consumers’
trust. These intelligent virtual assistants
provide accurate, consistent and compliant
information throughout the sales processes
and listen in on call center agents to ensure
they do the same.
Wearable computing
Health wearables, such as smartwatches
and sensors embedded in clothing, have
created a huge health insurance market,
with policies that include preventive
medical assistance provision and
connections to health professional doctors
and medics.
Web-scale computing
The IT organization and architecture
has been redesigned for web-scale
computing, underpinned by a software-
defined architecture. This has allowed a
more profound digital transformation of
insurance operating models, from front
to back. Its operational simplicity allows
insurers to be more agile while optimizing
investments.

6. 115Ascent Look Out
Sentiment analyticsDevOps
Prescriptive analytics
Cloud Service
Integration
High performance
computing
Semantic technologies
Streaming analytics
Hybrid cloud
Mobile first & real-time
interfaces
Rules engines
Virtual assistants
Context-rich systems
Privacy-enhancing
technologies
Distributed analytics
5G networks
Self-adaptive security
Pattern-matching
technologies
Blockchain
Robotics/intelligent
automation
Internet of Things
Web-scale computing
Wearable computing
Software-defined
technologies
Key Enablers in Insurance
Custom
er
Experience
Custom
er
Experience
Business
Reinvention
Business
Reinvention
Operational
Excellence
Operational
Excellence
Trust&Com
pliance
Trust&Com
pliance
They have the agility they need to rapidly
and successfully launch and support
new products and new mobile apps. In
other words legacy systems will need to
be dramatically reduced in scope and
perimeter, core processes and business
rules taken out by dedicated modern,
flexible, real-time architectures.
Insurance