The document discusses survey findings that show customers increasingly want connected insurers that can provide personalized care and meet their needs. It finds that UK insurance customers have low trust in insurers and high rates of switching providers. Customers value transparency in pricing, coverage and claims more than brands or low prices alone. The rise of technologies like the Internet of Things means insurers will need to use dynamic customer behavior data to improve loyalty and offer new propositions around risk monitoring.

1. ©2015 IBM Corporation1 12 October 2015
Customers increasingly requiring connected insurers
Capturing hearts, minds and market share
Lee-Han Tjioe
Insurance Industry Leader Europe IBM
London, October 5, 2015

2. ©2015 IBM Corporation 12 October 20152
We surveyed 12,000 consumers in 24 countries on their insurance
relationships, value preferences and switching behavior
Source: IBM Institute for Business Value survey data 2014, n=12,210
> 50 years
30-50 years
< 30 years
Male
Female
Very high
High
Average
Low
Very low
Income
Age
Gender
includes
the U.K.
n=539

3. ©2015 IBM Corporation 12 October 20153
U.K. Insurance clients are looking for providers who take personal
care
Low trust
Source: [1] IBV survey data 2007-2014 “Do you agree with the statement ‘I completely trust the insurance industry’?”
[2] IBV survey data 2012, 2013, 2014 „Please state how often you switched your insurance provider in the past two years
(3) My needs changed and the previous provider could not meet my new needs
44%
Of UK customers do
not trust insurers 1
50,5%
of UK customers switch
insurer at least 1 time in
last 2 years 2
High churn
32%
of UK customers who
switched do this because
of lack of personal needs
served 3
Lack of personal care

4. ©2015 IBM Corporation4 12 October 2015
Value propositions of P&C Insurers require differentiation on 3 main
disciplines
“Transparent”-
“Provide me with better visibility
on my risk coverage, claims
situations and ensuring right
pricing of my individual risks when
I need it via multiple connections”
“Share of Mind”-
“Provide more relevant content
and services to me via multiple
connections which help me to
reduce my personal risks”
“Personal”-
“Understand my
behavioural preferences
and give me tailored
propositions, individual
advise and pricing for my
specific needs”
1
32
Customer
Behavior
Value
Proposition
Technological
Innovation

5. ©2015 IBM Corporation 12 October 20155
Greater granularity in analytics can help fine-tune communication
even further – U.K. customers have a different profile
Attitude Cluster Security-
oriented
individualist
Demanding
support-
seeker
Loyal quality-
seeker
Price-
oriented
minimalist
Support-
seeking
skeptic
Informed
optimizer
% of total 16% 16% 18% 16% 19% 15%
% U.K. 24% 6% 10% 30% 8% 22%
Key theme "I know what I
want and
organize
myself"
"I need
personal
advice"
"I trust my
insurer and
remain a loyal
customer"
"I do not like
insurers –
make it cheap
and stay away"
"I need advice
but prefer to
keep my
distance from
insurers"
"I take time to
research to find
the best"
Analytics show how insurers should communicate
Source: IBV survey data 2014. Top n=12,210; U.K. n=539
Bottom U.K. n=408. Q: Please select the three channels most important to you when searching for INFORMATION about your insurance coverage.
website
insurer
aggregator
telephone
indpt
agents
peers
Security-oriented
individualist
Price-oriented
minimalist
Informed optimizer
Customer
Behavior

6. ©2015 IBM Corporation 12 October 20156
6
It USES ALL DATA by surfacing up
to the second structured and
unstructured data collected across
INSURER and public
It is REAL TIME providing next
best action guidance to customers
and associates while they are on
phone or in web
It is VIRTUAL in that data is aggregated
on demand vs. relying on a centralized
warehouse
It is also BATCH leveraging massive
amounts of structured and
unstructured data to produce insight
across the business
It LEARNS AND REASONS the next
best action by leveraging sense
making, cognitive computing, and big
data technology
It uses NATURAL LANGUAGE
DIALOGUE in customer interactions
via web, phone, associate
It is SELF SERVICE by providing
analysts and others across the
business a rich data discovery platform
customer analytics
Customer
Transforming from Intuition to Cognitive Insight and “Watson” like Guidance
to ensure the best possible outcome for each customer and each customer
interaction
Leading insurers adapt COGNITIVE CUSTOMER INTERACTION
SYSTEMS to transform into customer centric servicing
COGNITIVE
4
Customer
Behavior

7. ©2015 IBM Corporation 12 October 20157
Value is more than just price. Perception of value matters
Value
Proposition
Customers don‘t see price in
absolute terms, but as a matter of
fairness
Price consciousness per se has no
immediate effect on loyalty....
Loyalty
Index
medium
high
Price consciousness
medium
high
Quality consciousness
3,4
3,6
3,8
4
4,2
4,4
...too high ... fair ... too low
Do you think the premium of your
insurance is…
global U.K.
Source IBV survey data 2014, global n=12,210, U.K. n=539
Loyalty
Index
... perceived quality does

8. ©2015 IBM Corporation 12 October 20158
Insurers brand matters less than expected – for the insurance
customer of the future, direct and individual engagement is more
important
20% 68% 12%
of sample
low medium high
Brand consciousness
Loyalty
Index
medium
high
Only very high brand consciousness
increases loyalty1
Brand
Enthusiasts
High propensity for
individual
recognition and two-
way engagement.
51%
Millennials
25%
of total disposable
income
The customer of the future tends toward
a new view of brand2
Source: [1] IBV survey data 2014, n=12,210, U.K. n=539 [2] „Brand enthusiasm: More than loyalty“. IBV. Nov 2014.
[3] „Digital reinvention: Trust, transparency and technology in the insurance world of tomorrow“. IBV Jan 2014
The insurance customer of the future3
… is less concerned about price alone
… wants to interact with others when shopping
for insurance
... is omni-channel
… is looking for advice
… is open to new products and ideas
20% 71% 9%
of sample
Value
Proposition

9. ©2015 IBM Corporation 12 October 20159
Customers can accept product complexity, as long as they are
enabled to understand how it works.
There is little discernible effect of
product complexity on loyalty…
... it is transparency about the product
that counts
“We need to “de-mystify” the world of
insurance through increased transparency
and reduced complexity.”
CEO, All-lines insurer, Singapore
Loyalty
Index
medium
high
low medium high
Product knowledge
42%
44%
Percentage of customers who are
highly loyal when they feel…
… their insurance is not complex
… their insurance is highly complex
Source IBV survey data 2014, n=12,210
Technological
Innovation

10. ©2015 IBM Corporation 12 October 201510
The Internet of Things will be an important playing field for insurers
– the millennial customer will expect it
Do you own or can you imagine owning
devices that connect to the Internet on
their own?
(E.g. refrigerator, washing machine
etc.)1
I would be comfortable with my
insurer using the data from these
devices
If my insurer used the data from these devices,
this would improve my loyalty
36%
56%
Millennials Gen X Boomers
50%
Source IBV survey data 2014, n=12,210; U.K. n=539
[1] Answer “yes”
21%
19%
15%
44%
41%
35%
36%
40%
50%
Millennials
GenX
Boomers
agree neutral disagree
21%
19%
14%
45%
42%
38%
34%
39%
49%
Millennials
GenX
Boomers
agree neutral disagree
U.K.
48%
U.K.
43% U.K.
31%
Technological
Innovation

11. ©2015 IBM Corporation 12 October 201511
INTERCONNECTED INSTRUMENTEDINTELLIGENCE
3 Ecosystems to Co-create
Deliver Customised
Insights based on
Deep Customer
Analytics
Orchestrate a broad set
of services around an
integrated set of
customer needs
Offer a real-time
monitoring
proposition on key
risk objects
eCall4All

12. ©2015 IBM Corporation 12 October 201512
New business models are needed to address shifting insurance market
requirements
Seamless and automated
interaction with clients, third
party providers and other
insurers
From static data to
behavioural and
environmental dynamic data
Drastically reduce complexity
in supporting processes and
IT to become more Agile at
lower cost
From: To:
Access
Integration
Legacy
Admin
Networked
Data rich
Less is
More

13. ©2015 IBM Corporation