In May 2019, I delivered a keynote on the future of Insurance, mostly focused on the InsurTech market trends, volumes, and profiles. These slides share the point of view I had at the time. Some things have changed. Still, I feel that many of the concepts covered are relevant. You will find drivers of growth, as well as information on a few business models I reviewed to validate my thesis.
3. 3
InsurTech means technologically-enabled innovation,
targeted at the insurance sector that could result in new
business models, applications, processes, or offerings that
can result in an associated material effect on the insurance
market, the institutions within the market and the provision of
insurance products and services. The emerging technology
supporting the innovation must also have the potential to
transform an insurance business.
“
”
5. Snapshot: USD$ 29Bn of InsurTech funding to date
$4.3Bn
$6Bn
417
188
§ $29Bn of investment to date
§ 635 companies invested in during the past 24 months
§ $6.7Bn (303 startups) investment in 2019
§ 75 new launched companies. Lowest ever
§ Third most invested year after $4.3Bn in 2015 & $6Bn in
2018
5
$6.6Bn
75
n: 3,700 as at February 2020 with 1,500 funded InsurTechs
6. Where is the market going?
6
A number of new entrants categorized as Unicorns are setting the insurance innovation scene
Location
Created
Valuation
Business
Model
China – Shanghai
2013
$24Bn
Ecosystem
Play
USA – NYC
2012
$3.2Bn
Internet-First
Heath Network
USA – NYC
2015
$2Bn
Internet-First
Gig Economy
USA – NYC
2015
$1Bn
Usage Based
Motor Telemetry
India – Gurgaon
2008
$1Bn
Digital
Broker
7. LATAM & the Colombian market
7
LATAM Estimate of 70 startups
Founded
Business model
2009 - Chile
Distribution
Funding amount $39m
2012- Brazil
Internet-First
$18.5m
2011- Brazil
Distribution
$8.9m
2011- Brazil
Distribution
$5m
2011- Chile
Usage-based
$3m
COLOMBIA Estimate of 8 startups
Founded
Business model
2009 - Bogota
Distribution
Funding amount Series A
2015 - Bogota
Internet-First
Funded
2014- Pereira
Virtual Assistant
Unfunded
9. Today there are 2.6 billion millennials, born between 1981 and
1997 and between the ages of 22 and 38. Collectively they own
$2.45 trillion in annual spending power. Millennials are expected to
be the segment with the most purchasing power in the years to
come. By 2035, aggregate income is forecast to surpass all other
generations and reach $22 trillion annually.
Data from Pew Research Center
“
”
10. The velocity of change and current uncertainties around the drivers of that
change are creating clear discomfort within the insurance sector
Unearthing of underserved market segments
Re-inventing and transforming the value chain
Leveraging ubiquitous and emerging technologies
CustomersOperationsTechnology
Distribution
Underwriting
Claims Management
Data
Emerging Technologies
Millennials
The Elderly
SME & Gig Economy
10
11. Satisfying 5 generations of working customers
The insurance customer is evolving and demanding new services
Generation Z Millennials Generation X Baby Boomers Silent
2017
2025
digital natives,
entrepreneurial,
connected, fast
decision making
independent,
skeptical, tech
pioneers, hard
working
self-expressive,
group oriented,
global, tech
dependent
loyal, value
authority, top-down
management,
formal, proud
optimistic, self-
focused,
competitive,
workaholic, forever
young
20 or less 21 to 41 42 to 53 54 to 72 Older than 72
1% 34% 32% 31% 2%
19% 42% 21% 18% -
Sources: Various. Studies on the Future of work
11
12. As a Baby Boomer, I prioritize
work and family and will take
c-suite and advisory positions
to show my worth. I also need I
need access to knowledge on
ways to protect myself
It is estimated that Millennials
will represent
75% of the working
population by 2025. They are
seeking for offers aligned with
their believes and specific
needs High Net Worth Gen Xers want
transparent interactions and
access to need-linked
experiences, starting at the
beginning of their buying
journey
Gen Z, proficient in the use of
technologies aspire to become
the next Zuckerberg. They
want digitized and mobile first
experiences
As we age and live longer, the
priorities of the Silent
Generation are around
managing health , wealth &
complex illnesses. They are
looking for prevention and
wealth preservation
12
13. 46%
of time spent online on
mobile devices
Engage via mobile
devices
Leverage social media
platforms to distribute
content
72%
global social network
penetration
Create compelling stories
with videos and pictures
3x
more likely than baby
boomers to watch a video
on mobile device
Create special deals and
rewards for them
Delight them continuously,
particularly post sale
56%
willing to share location
in order to receive
coupons from nearby
businesses
25%
expect to get a response
within 10 minutes of
reaching out for customer
service via social media
81%
check Twitter at least
once per day
84%
follow brands on
Facebook
84%
share content they like
with their friends through
text & visual messaging
39%
have ordered food and
beverages through their
mobile devices
20%
used their smartphone to
check-in a hotel room
60%
prefer watching a video
as opposed to reading a
newspaper 76%
follow brands on
YouTube
78%
more likely to select a
brand with a
loyalty/reward program
than one without one
69%
reported feeling good
about when they resolve a
problem without talking
to a customer service
representative
13
What motivates gen z and millennials?
14. This results in volumes of new customer needs and macro-trends that must
be addressed
Health & wealth preservation
Ecosystem-driven society
Sustainability
Social consciousness
Hyper-personalization
Global connectedness
The flexible & agile enterprise
Knowledge as an economic asset
Humanizing tech
Serving the underserved
14
15. This results in volumes of new customer needs and macro-trends that must
be addressed
Health & wealth preservation
Ecosystem-driven society
Social consciousness
Hyper-personalization
Global connectedness…
The flexible & agile enterprise
Knowledge as an economic asset
Humanizing tech
Serving the underserved
15
Sustainability…
16. This results in volumes of new customer needs and macro-trends that must
be addressed
Health & wealth preservation
Ecosystem-driven society
Sustainability
Social consciousness
Hyper-personalization
Global connectedness
The flexible & agile enterprise
Knowledge as an economic asset
Humanizing tech
Serving the underserved
16
3
2
1
2
21 3
17. Hyper personalisation = Driving flawless and frictionless experiences
88% of insurance consumers are demanding
more personalised offers, messages, pricing and
recommendations from their insurers
Why:
§ Consumers want to experience the same experiences
created by the like of Google, Amazon, Facebook, Apple,
Netflix, Uber and Airbnb. These experiences are now part
of our day-to-day lives
What:
§ Hyper-personalisation campaigns utilise real-time
behavioural data from a multitude of channels and touch-
points to profile customers, tailor content, products and
services for each single user. Processes have to be fully
digitised to become seamless
How:
§ Hyper-segmentation
§ Timely and relevant content
§ Experiential, emotional, service-led
§ On-Demand, usage-based, modular and frictionless
17
18. Social Consciousness = Freedom From Ownership
18
Why:
§ Recognition that full ownership is a value of the past for
specific asset classes (i.e. vehicles, clothes). Some assets
will be rented, borrowed, offered or sold. Others will need
to meet new societal requirements (e.g. IoT-led/ smart)
What:
§ Rise of the global middle class, including millennials
§ Increased recognition that societies prefer to consume
products and services in different and unique ways
§ The search for authenticity and purpose drives changes in
one’s core values, needs and social believes
How:
§ The business of sharing will require new service models
(e.g. credit financing, space, equipment, freelancing)
§ New subscription/ consumption models
§ Recognition that one can be rewarded (fair price,
discounts) for good behaviour
As sharing grows, insurance
uptake is on the rise
Approximate number of
people that have shared
assets or services.
Approximate number of
people that have consumed
sharing economy assets
or services.
Proportion of sharers who have
insurance cover for taking part
in the sharing economy.
Proportion of home sharers
who upgraded their buildings
or contents policy or took
out a new one.
Proportion of ride sharers
who upgraded their motor
policy or took out a new one.
49%
680million
37%
57%
500million
According to survey findings and analysis of consumers
across the US, UK, China, Germany, France, and UAE:
Approximate number of
people that have shared
assets or services.
Approximate number of
people that have consumed
sharing economy assets
or services.
in the sharing economy.
Proportion of home sharers
who upgraded their buildings
or contents policy or took
out a new one.
Proportion of ride sharers
who upgraded their motor
policy or took out a new one.
49%
680million
37%
grows, insurance
the rise
of
ed
of
sumed
ets
Proportion of sharers who have
insurance cover for taking part
in the sharing economy.
Proportion of home sharers
who upgraded their buildings
or contents policy or took
out a new one.
Proportion of ride sharers
who upgraded their motor
policy or took out a new one.
49%
37%
57%
ndings and analysis of consumers
na, Germany, France, and UAE:
uptake is on the rise
Approximate number of
people that have shared
assets or services.
Approximate number of
people that have consumed
sharing economy assets
or services.
Proportion of sharers who have
insurance cover for taking part
in the sharing economy.
Proportion of home sharers
who upgraded their buildings
or contents policy or took
out a new one.
Proportion of ride sharers
who upgraded their motor
policy or took out a new one.
49%
680million
37%
57%
500million
According to survey findings and analysis of consumers
across the US, UK, China, Germany, France, and UAE:
As sharing grows, insurance
uptake is on the rise
Approximate number of
people that have shared
assets or services.
Approximate number of
people that have consumed
sharing economy assets
or services.
Proportion of sharers who have
insurance cover for taking part
in the sharing economy.
Proportion of home sharers
who upgraded their buildings
or contents policy or took
out a new one.
Proportion of ride sharers
who upgraded their motor
policy or took out a new one.
49%
680million
37%
57%
500million
According to survey findings and analysis of consumers
across the US, UK, China, Germany, France, and UAE:
Sources: Various. Deloitte/ Lloyd’s Innovation Report
19. From Reactive Offers -> Preventative Services
Why:
§ The increased accuracy and precision of risk underwriting,
risk pricing and the prediction of future claims will enable
insurers to become more prepared to deal with major risks
What:
§ As consumers learn to take better care of their health and
wealth, insurance providers are well-positioned to identify
new types of data to analyse risk, assess profiles, enhance
behaviour and offer the right value-added services
How:
§ Data collections & analysis from wearables and sensors
§ Advanced analytics for prediction
§ Life and robo-coaching and proactive risk advice
§ Gamification, nudges and rewards to encourage good
behaviour
19
23. World top 10 most valuable & innovative companies in 2019
Companies
Rev
2018
Market Cap
16 March 2019
Most
Valuable
Most
Innovation
Microsoft (Tech) $110Bn $890Bn 1 4
Apple Inc. (Tech) $265Bn $878Bn 2 3
Amazon (Tech/ eCommerce) $232Bn $841Bn 3 2
Alphabet/ Google (Tech/ Internet) $137Bn $825Bn 4 1
Berkshire Hathaway (Conglomerate) $245Bn $504Bn 5 N.R.
Facebook (Tech/ Internet) $56Bn $474Bn 6 8
Alibaba (Tech/ eCommerce) $56Bn $470Bn 7 33
Tencent (Tech/ Internet/ Game) $45Bn $444Bn 8 N.R.
Johnson & Johnson (Health/ Pharma) $81Bn $366Bn 9 24
JP Morgan Chase (Finance) $131Bn $349Bn 10 30
What do you see (or not) on this chart?
23
Source: www.value.today, Forbes, BCG, Fast Companies, Rainmaking Analysis. Tencent #14 in 2018, 5 (Samsung), 6 (Netflix), 7 (IBM), 9 (Tesla), 10 (Adidas)
24. How do the most innovative companies innovate?
Companies Personalization Usage-based
Collaborative
ecosystems
Alphabet/ Google (Tech/ Internet) YES YES YES
Amazon (Tech/ eCommerce) YES YES YES
Apple Inc. (Tech) YES YES YES
Microsoft (Tech) YES YES YES
Samsung (Manufacturing/ Mobile) YES YES
Netflix (Internet/ Media) YES YES YES
IBM (Tech) YES YES YES
Facebook (Tech/ Internet) YES YES YES
Tesla (Tech/ Automotive) YES YES
Adidas (Consumer Electronics) YES YES
24
25. Innovation Differentiation criteria
Many new models offer products or services that are better tailored than the dominant
models to customers’ individual and immediate needs. Companies often leverage
technology to achieve such competitiveness from un-bundling and customization
Often relate to pricing. Some models charge customers when they only use a product or
service, rather than requiring them to buy something outright. Subscription models are built
on such principles. The customers benefit because they incur costs only as offerings
generate value. The company benefits because the number of customers is likely to grow
Some innovations are successful because a new technology improves collaboration with
supply chain partners and helps allocate business risks more appropriately, making cost
reductions possible.
Personalization
Usage-based
Collaborative
ecosystems
25
26. Personalization
TESLA
Industry: Automotive/ Energy Storage
Founded: 2003
Revenues: $21Bn
Market Cap: $34Bn
Advanced technologies everywhere
Accelerates the advent of sustainable
transport by bringing compelling mass
market electric cars to market to satisfy the
needs of the early adopter as soon as
possible
§ Expensive no matter: It was simply
impossible to mass market Tesla’s first product due to
its startup status of “building its first car” with its “first
technology iteration”. So the first high-performance
electric luxury vehicle had to be the Tesla Roadster, a
sport car.
§ From dealerships to direct sales: It is all
about owning the sales channel and the product
development. Tesla created an international network
of company-owned showrooms and galleries, in
prominent urban centres around the world. Internet
sales allowed for full personalization
§ Personalized servicing: Customers can
charge or service their vehicles at the service centres
and Service Plus locations. Tesla Rangers, the mobile
technicians, service vehicles from one’s home. Data
can be uploaded wirelessly so that the technicians can
view and fix specific problems online without ever
needing to physically touch the car
§ Supercharger network: a Tesla owner can
fully charge a vehicle in about 30 minutes for free
through the network.
26
27. New technology in any field takes a few
versions to optimize before reaching the
mass market, and in this case it is competing
with 150 years and trillions of dollars spent
on gasoline cars.
“
”Elon Musk - Tesla
28. Usage-based
ROLLS ROYCE
Industry: Engineering
Founded: 2011
Revenues: $16Bn
Market Cap: $18Bn
Power-by-the-hour
Circular business model helps Rolls Royce
reduce waste and optimise resource
efficiency, whilst enabling each customer to
maximise the flying potential of their engines
as well as enhance the robustness of Rolls
Royce’s supply chain.
§ Subscription pricing: charges on a fixed $ per
flying hour basis, which enables Rolls Royce to be
rewarded in real-time about engines that perform and
those that do not
§ Real-time data: gathers large amounts of data
on engine performance through proactive
maintenance services, which when combined with
advanced analytics enable Rolls Royce to plan
proactively maintenance or repair work to minimise
disruption
§ Optimized risk transfer: removes the burden
of engine maintenance from the customer and
transfers the management of associated risks to Rolls-
Royce
§ Lengthen the life of valuable assets:
keeps engines flying for longer to reduce waste
production and optimise resource efficiency, enabling
clients to reduce demand for new components that
require complex materials for manufacturing purpose
28
29. Collaborative ecosystems
ALIBABA
Industry: Internet/ eCommerce
Founded: 1999
Revenues: $56Bn
Market Cap: $470Bn
AI-driven C2C, B2C, B2B digital sales
services
Reinventing China’s eCommerce market by
accommodating innovations across the retail
value chain to help create new types of
online businesses targeted at a multitude of
customer types
§ The ecosystem: a community of businesses and
consumers interacting with one another on an online
and off-line platform
§ The platform: provides all the resources, or
access to key assets and resources an online business
would need to succeed, and hence support the
evolution of the ecosystem
§ Smart business: players within the ecosystem
share similar business goals, digital data combined
with computing power and machine-learning
technology. Those combined together identify ways to
better fulfil a range of consumer needs
§ Continuous learning: Alibaba invested in
seven research labs that are focused on artificial
intelligence, machine learning, network security,
natural language processing and more. This to
increase its exposure to new customer problems and
industries
29
30. Of the world’s 10 most highly valued companies
today, seven are internet companies with business
models similar to ours. Five of them—Amazon,
Google, and Facebook in the United States and
Alibaba and Tencent in China—have been around
barely 20 years. Why has so much value and market
power emerged so quickly?
“
”Ming Zeng - Alibaba
31. Collaborative ecosystems
ZHONGAN
Industry: Internet-first insurance
Founded: 2013
IPO: $1.5Bn
Market Cap: $24Bn
Designing embedded ecosystems
China’s first and largest online personal lines
insurer with over 460 million customers and
over 5.8Bn (1/3 nationally) policies issued.
Developed 5 major ecosystems which include
300 ecosystem partners to take friction from
customer insurance engagements
§ Target market: 60% of ZhongAn customers are
millennials, aged 20 to 35. Most of these consumers
bought their first insurance policy through the
company
§ Personalization: ZhongAn offers a wide-range of
personalized products and services that are available
and serviced via the WeChat platform
§ Micro-insurance: the average ZhongAn
customer has 5 to 7 policies. ZhongAn average policy
price is between $2 to $4 per policy
§ Technology enablers: ABCD stand for artificial
intelligence, blockchain, cloud & big data. Automated
claims settlement by 99% of cases
§ Agile delivery: launching 500 products per
week. Processing 32k policies per second. 5-10 days
from designing to launching a new product to market
§ Connectivity: connecting data, channels, supply
and value chains into unique API linked ecosystems
31
32. Top five technology enablers
Sensors & Wearables Cognitive Intelligence Mobile & Cloud Infrastructure
Platform enablers (e.g. APIs) Decentralized Production (e.g. 3D printing)
32