Series-A Partners looks at the macro trends within the insurance industry that are providing the catalysts for online insurance industry innovation. Machine Learning, APIs, big data, mobile phones, the blockchain and other technologies will empower the providers and policyholders with increased levels of transparency, efficiencies, and a better overall user experience.
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The Early Days of Disruption: the Online Insurance Industry
1. PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
The Early Days of Disruption:
the Online Insurance Industry
Produced By:
Alan Alden
alan@series-a.com
@SeriesAPartners
www.series-a.com
2. PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
Page 2
21 20
46
33
15
12
18
10
2015 2025
100
Product Development
and Sales Support
Operations
Administrative
Support
IT
Insurance Industry workforce
% of FTEs1 Over the next 10 years,
up to 25% of full-time
positions in the
insurance industry may
be consolidated or
replaced2
1Based on Western Insurers; FTE = Full-Time Equivalent/Employees
2 McKinsey & Co (2015)
Tech Is Ready To Streamline Insurance
75
3. PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
Page 3
Forces of Insurance Innovation
AGILE IT
DATA
Data
Proprietary and Big Data
Data Analytics
Collaboration
Straight-Thru-Processing
Connected Process Chains
Connectivity with industry
and non-industry platforms
Extensive APIs
Agile IT
Fast and Flexible IT
Interconnectivity
Digital Consumer
Experience
COLLABORATION
4. Page 4
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
The Need To Modernize: Consumer Satisfaction
Insurance industry
has been slow to
adopt new digital
technologies
Focus has been
more on the agents
than the clients
Younger consumers
expect quick and
easy access,
transparency, and
high quality service
15.2
11.8
11.1
10.0
8.9
8.5 8.5
8.0
5.8
5.0
4.3 4.2 4.1 4.0 3.8 3.5
0
4
8
12
16
PersonalBanking
OnlineMerchants
MediaRetail
ElectronicsRetail
ApparelRetail
Airlines
Investments
Hotels
Supermarkets
Electricity,Water,Gas
Automobiles
GovernmentServices
HealthcareProviders
INSURANCE
RealEstate
Telco/Cable
Average
7.3
INSURANCE
Relative satisfaction utility score
Delivering Digital Satisfaction @2013 – The Boston Consulting Group (BCG)
5. Page 5
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The Need To Modernize: Firms Understand the Need
42%
24%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Little or No Impact
Moderate Impact
Some Impact
High Impact
Very High Impact
2015 2013 2010
IT Environment’s Impact
on Achieving Desired Levels of Customer Service
As mobile empowers
policyholders, IT’s
impact on customers
is increasing
Almost 2/3 of
respondents
acknowledged
importance of IT
modernization in
achieving increased
levels of customer
service
6. Page 6
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
The Opportunity
$175
Billion
2015
$189.2
Billion
2017
Global Insurance IT Spending
4% CAGR
7. Page 7
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Country / Region 2013 2014 2015 2016 2017
US (7.1%) (1.7%) 1.3% 1.0% 2.3%
Canada 3.0% 7.6% 2.4% 3.5% 3.8%
UK (5.9%) (10.4%) 2.2% 3.5% 3.2%
Japan 6.8% 7.1% 2.7% 3.0% 3.7%
Australia 9.8% 26.5% (5.8%) 4.1% 2.1%
France 3.6% 8.4% 4.2% 2.6% 2.5%
Germany 2.5% 2.7% 3.1% 0.9% 0.9%
Italy 20.6% 29.5% 2.8% 2.2% 2.3%
Spain (4.3%) (2.5%) (11.6%) 0.3% 0.6%
Netherlands -5.9%) (5.2%) (10.0%) 2.2% 1.7%
Advanced Markets -2.5% 4.2% 1.9% 2.4% 2.6%
World -1.5% 4.7% 3.3% 4.0% 4.2%
Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%
With Great Growth Ahead….
Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%
8. PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
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8
The Insurance IT Landscape
Represents
Near-Term
Socatra
Opportunities
RATE QUOTE BIND ISSUE
ENDORSEMENTS
& OTHER POLICY
SERVICES
RENEWAL
Core Policy
Admin System
Document
Creation
Billing
General
Ledger
Document Management & Workflow
Business Intelligence
Analytics
Reinsurance
Management
Core Claims
System
Disbursements
CRM
Rating Engine
Underwriter
Workbench
Document Creation
Customer
Portal
Agent
Portal
RATE QUOTE BIND ISSUE
ENDORSEMENTS
& OTHER POLICY
SERVICES
RENEWAL
Policy Admin Processes
9. PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
Page 9
Insurance Industry Landscape
Insurance
Landscape
Courtesy: VentureScanner
10. PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Insurance Industry
Emerging Markets
Opportunity Overview
11. Page 11
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Emerging Markets: Small IT Presence / Large Oppty
35.9%
28.9% 28.2%
0.9%
3.4% 1.5%
0%
10%
20%
30%
40%
Europe North America Asia Middle East and
Central Asis
Latin America Africa
Current Insurance Penetration Rates
$78.5
$54.5
$31.4
$5.3 $5.3
$84.4
$56.8
$35.6
$6.7 $5.8
$-
$20
$40
$60
$80
$100
North America Europe Asia Pacific Latin America All Other (Africa, Middle
East, CIS)
2015 2017
Courtesy: SwissRe (2012)
Global Average
6.6%
Courtesy: Celent (2016)
Global IT Spending By Insurance Companies
12. Page 12
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Emerging Markets: Life Insurance Growth
13. Page 13
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Emerging Markets: P&C Growth
14. PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
Page 14
Why Getting to Know the Local Markets is Key
Local players in
emerging markets
still dominate
Multi-nationals
(MNCs) struggle to
increase their
presence
Know Various
Geographic
Purchasing
Priorities
95
70 70
79
4
30
9
10
1
21
11
0%
25%
50%
75%
100%
China India Brazil Russia
Local Joint-Venture ForeignSource: McKinsey Global
Market Share of Foreign versus Domestic Players (total business)
Priorities When Investing in Digital Transformation Projects
Rank Asia / Pacific Latin America EMEA North America
1) Mobility (Devices and Apps) Business Process
Automation (STP)
Sale and Service of
Products Online
Business Process
Automation (STP)
2) Sale and Service of
Products Online
Sale and Service of
Products Online
Business Process
Automation (STP)
Streamlining
Communications with
Customers via Portal
3) Engaging Interface / UX Mobility (Devices and Apps) Analytics Engaging Interface / UX
4) Business Process
Automation (STP)
Engaging Interface / UX Engaging Interface / UX Sale and Service of Products
Online
Source: Celent Survey (2015)
15. Page 15
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Go-to-Market Key Considerations
Most insurers are spending are spending between 1-6% of direct written
premiums on IT*
̶ Average is 3.2%
~25% is spent on external software and an additional 22% is spent on
external services
More than 70% of vendors opt for vendor solutions (vs building own)
Growth and retention, process optimization (faster, leaner and smarter
business processes), and meeting regulatory requirements are the top three
drivers for IT investment at Asian insurers
* Source: Celent Asia Pacific Insurance CIO survey 2014
16. Page 16
Thank You
Contact Information:
Alan Alden
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
alan@series-a.com
@SeriesAPartners
www.series-a.com
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