Insurance - Opportunities in a digital and changing world

© PA Knowledge Limited 2014
1PA CONFIDENTIAL - Internal use only FORSIKRING 2016 – OPPORTUNITIES IN A DIGITAL AND CHANGING WORLD
Forsikring 2016
Opportunities in a
digital and changing world

Creating value from digital
Unlocking
the value
of digital
business
It is
collaborative
and social in
nature
It uses data
to really
tailor the
experience
It
experiments
and
innovates
It allows
customers
seamless
engagement
across
channels
It is efficient,
lean and
highly
responsive
It puts more
control in the
hands of the
customer
It’s digital on
the outside
and on the
inside
Providers will need to explore and
exploit all opportunities to use the
digital environment to enhance the
value they create for customers and
stakeholders at a lower cost.
Digital can help reshape how providers operate,
who they partner with to shape the proposition
and how they work to deliver it.
Each component of the digital business has the
potential to drive higher returns and open up new
opportunities.

Insurance and pension 2014
Claims Customer retention Threatening disruption
In the last five years, the number of smart solutions and connected devices (IoT) has increased fourfold*, and it is estimated that
there will exist 50 billion connected devices by the end of 2020**
Between 12%-16% of insurance
customers changed main
insurance company over the past
year, 8% expect to changed within
the nearest future****
The average NPS score in the
sector is -6*****
The customers add low value to a
product and do not feel any
loyality; instead they buy in the
basis of price.
Likely players who will create new
ecosystems******
Apple
Google
Telcos
Manufacturers of household
appliances
Energy and utility companies
Other major technology companies
(e.g. Samsung, Microsoft)
Insurance companies
Most likely
Least likely
67%
61%
50%
44%
28%
22%
6%
Sector challenges
New potential services Position Digital considerations
• Dominant in the ecosystem
• Partner agreements
• Passive involvement.
• Identification and prevention of leakage and
moisture
• Repairs and maintenance
• Protection against extreme weather conditions
• Security
• Fire prevention.
• Access and use of data
• The organisation’s brand
• Customer experience
• The ability to innovate
• The digital capability.
DRIVERS OF
CHANGE
EFFECT ON
INSURANCE
COMPANIES
Source: *Business Insider Intelligence, **Cisco, ***ABI, ****Chartered Institute of Loss Adjusters, *****FBI kvartalsrapport
Smart cars
Connected
Homes
DKK
… in a changing world…

Technology Tipping Points
The Internet
of Things
Implantable
Technologies
Supercomputer
in Your Pocket
Storage
for All
Smart
Cities
Artificial
Intelligence
Wearable
Internet
The
Connected
Home
Driverless
Cars
The
Sharing
Economy
3D
printing
Bitcoin and
the
Blockchain
Vision as
the New
Interface
Robotics
and
Services
Big Data
for
Decisions
Our
Digital
Presence

Driverless Cars
More time for focusing on work
and/or consuming
Upend existing models of
transportation and logistics
Less congestion and emissions
Improved safety
The tipping point: Driverless cars equalling 10% of all cars on US road
Expected date: 2026
By 2025: 79% of respondents expected this tipping point to have occurred

The Sharing Economy
The tipping point: Globally more trips/journeys via sharing cars than in private cars
Expected date: 2025
"Uber, the world’s largest taxi company, owns no vehicles.
Facebook, the world’s most popular media owner, creates
no content. Alibaba, the most valuable retailer, has no
inventory. And Airbnb, the world’s largest accommodation
provider, owns no real estate. Something interesting is
happening.“
Forbes.com

Wearable Internet
The tipping point: 10% of people wearing clothes connected to the internet
Expected date: 2022
“How would you be interested in wearing/using a sensor
. device, assuming it was from a brand you trust, offering a
. . service that interests you?”
Source: North American Technographics
Consumer Survey, 2013

The Internet of Things
The tipping point: 1 trillion sensors connected to the internet
Expected date: 2022
Heat your home efficiently
Make sure the oven is off
Track down those lost keys
Light your home in new ways
Check on your baby
Remember to take your meds
Track activity levels
Stay out of doctors office
Receive pollution warnings
Light street more effectively
Automatic parking finding
Keeping streets clean
“The Milky Way, the earth’s galaxy,
contains around 200 billion suns.
Worldwide, more than 50 billion
devices are expected to be
connected to the internet by 2020.”
World Economic Forum

Insurance Internet of Things
14,5%
13,7%
11,0%
6,1%
14,1%
40,7%
What is the greatest challenge slowing
IoT adoption for insurers?
9,1%
22,1%
24,7%
19,8%
11,8%
4,9%
7,6%
Where is the value for insurers in
applying IoT in their business?
Source: FC Business Intelligence, 2016

Where would you like to play?
You will need to embrace the changes in customer behavior and new technology by
improving your current offering whilst experimenting with future business models
Status quo – competing by a cost focus of stream lining
current products and services.
Seeking to improve customer experience by optimising and
improving existing solutions, e.g. incorporating new
channels.
Working with new business models and value-adding
activities to suit new customer behavior and needs, e.g.
AirBnB and Uber.
Staying ahead of the curve by incorporating new
technologies to create new ecosystems with opportunities
for growth.
1
2
3
4
1
2
3
4
Better use of
existing setup
Existing products,
services and experience
New markets and
service experience
New ecosystems
Adoption
Low
Business as usual Disruption
Insurance market
Digitalcustomerexperience

Engaging the next generation of customers
Providers need to look ahead 10 years to deliver
engagement with future customers.
To survive and thrive will mean establishing
stronger relationships with more customers, at
increasingly competitive price points, while
operating more cost effectively.
That can only happen if customers are doing more for
themselves and the human element – in both advice and
service – is concentrated on the points where
it adds the most value.
Consumers will demand higher levels of service from insurance
providers and will expect these services to be on a par with the
same experience they receive from those who stand out in a
crowded marketplace as delivering exceptional personalised
experiences.
74%
of FS companies struggle to
Improve the customer experience
through digital innovation
PA Digital Barometer Survey

Plotting the customer journeys
The expectation of customers today
is that there will be no barriers in their
dealings with providers.
With this increased choice comes greater
expectations that customer interactions
will be channel agnostic, relevance based
and truly designed around customer
needs.63%
of FS companies aren’t
delivering a seamless integrated
customer experience
Seamless channel interaction is critical
There are many customer journeys a customer can take,
based on key factors including the advice or guidance
taken, the chosen insurance and who provides the
service.
Customers want to follow these journeys using a blend of
digital (mobile, tablet, desktop), telephony and face to
face (physical and virtual).

Getting value from data
Customer experience needs to be
connected across all channels
How can providers who lack a single view
of the customer hope to paint a rounded
picture of each the individual
circumstances affecting customers in
attempting to deliver a tailored,
personalised experience? Having the data to enable the detailed
knowledge of customer needs is now
critical because the customer behaviours
are fundamentally changing
Effective Customer Relationship Management is
not a new concept, but it has been hard to make
the case for change given legacy issues and a
lack of a cohesive data strategy.
The capability of Customer Experience
Platforms can enable re-orchestration of data
within insurance providers to provide internal
and external facing systems with the ability to
decide and predict the right outcome for
customers.
64%
of FS companies are unable
to use data effectively to tailor
the customer experience

Reinventing advice
The challenge of simplified advice can be resolved
by emerging technologies.
Artificial intelligence engines will improve the ability to deal with different
customer needs, and the customer experience will improve beyond
recognition with the likes of virtual reality, gamification and virtual
assistants.
Data capture will also become easier as existing customer databases
evolve into data that can be integrated into robo-advice processes.
“With face to face advice becoming
a preserve of wealthy clients,
providers need to look at the benefits
of robo-advice solutions to deliver
simplified and straight-through
propositions.”
Vaughan Jenkins
Head of Financial Technology at PA
| 11
63%
of FS companies don’t believe
they can easily integrate with
third-party solutions

Leveraging cloud based solutions
PA uses cloud-based services to help organisations create
innovative, cost-effective and scalable IT solutions, from
concept development to design and delivery.
To move at pace requires flexibility
to delivery change quickly
Cloud computing is no longer a fad
embraced only by brave early
adopters. It is an established and
proven game changer for all
businesses - large or small.
Benefits of cloud platform:
 Cloud app solutions, such as mobile apps, social
apps, business process apps, and websites
 Big data solutions, such as interactive tools, trend
detection and BI dashboards, using Google
BigQuery.
67%
of FS companies struggle
to bring new products and
services to market quickly

Overcoming legacy
Enabling efficiencies
through FinTech
In firms where the cost of changing content
on an output can run into millions, the idea
of launching a fundamentally new product,
or delivering a digital proposition that
actually speaks to underlying product
platforms in any transactional way, feels
like another world.
Increasingly, manageable solutions and
technologies are available off-the-shelf,
with a relatively straightforward integration
and flexible customisation overhead.
Solutions such as user-interface enablers from
Avoka and Vizolution, to workflow innovators
and verification automaters, there are myriad of
options to partner with leading edge technology
players to cut both cost and time out of the
transformation process.
66%
of FS companies believe
technology is holding them back

Time to think and act differently
Digital transformation cannot be done in isolation. You will need to
embrace both your traditional business, insuretech companies and other
players to form new eco-systems
Those who win will be those that can adapt to change
striving to incubate ideas into transformational propositions.
DECENTRALISED
Business units
Digital
Innovation
Digital
Innovation
CENTRALISED
Business units Business units
Digital
Innovation
SEPARATED
Digital role Non-digital role
VALUE STREAMS
Business units
Digital
Innovation

Deploying change faster
There are a number of techniques and processes
that can help providers transform through adopting
agile.
Adopting agile requires a significant change for both the organisation and
its individual employees including not only those within Change & IT
teams but crucially the business overall.
Agile is no longer just a methodology, but a culture in its own right.
Agile has the capability to:
Approached correctly, Agile has the
potential to delivery projects 3 times
more quickly than traditional waterfall
projects delivering substantial cost
benefits.
 Deliver better products faster
 Simplify organisational complexity.
 Create value and reduce risk.
 Train and empower digital.
62%
of FS Companies don't believe
their existing governance
models are suitable to deliver
digital change quickly.

Enabling transformation
Success in releasing the
capability of digital
transformation will
require providers to align
their culture and
capabilities to deliver
change.
Providers need to look at their overall
organisational capability. We define
this as the culture that will drive digital
transformation.
Providers will need to enhance their digital
capabilities across the organisation to drive
transformation change.
| 6
50%
of FS companies don’t
believe they have the skills
to succeed
70%
of providers will continue
to outsource to focus on
core business
PA 2015 IT Outsourcing Study

Facing up to the digital challenges
Challenge Capability Enabler
Customer Experience Data
Customer Experience
Platforms & Analytics
Advice Automation
Robo-Advice &
Simplified Propositions
Legacy Systems IT Delivery
Agile Delivery
& FinTech
Proposition
Development
Research &
Development
Innovation Labs
Technology FinTech Architecture
Organisational Silos Culture Transformation
Business Design
Frameworks
Distribution Technology Partners Integration Services
Through our discussions with
providers it is clear that to enable
new digital capability requires a
number of challenges to be
overcome.
We have identified the capabilities that providers
are seeking to strengthen their digital
propositions.
Delivering this enhanced capability will require
providers to invest in the underlying enablers that
aid transformation.
The challenges facing providers to deliver their
digital capability require strategic decisions to be
delivered, together with a clear mandate to drive
change forward.

How to succeed with your
digital transformation?

Culture &
Leadership
People &
Skills
Structure &
Location
Strategy &
Governance
Application
&
Technology
Information
Process
Infrastructure
& Facilities
Sourcing &
Suppliers
CUSTOMER MODEL
DRIVETHETRANSFORMATION
PROGRAMME
DELIVERY
DIRECTION
DIFFERENTIATION
THINK DIGITAL
Set the Digital Business Pathway
ORGANISE DIGITAL
Access critical resources
BE DIGITAL
Ensure exceptional delivery and control
Enabling your digital transformation
Our transformation model helps clients understand the necessary
elements required to deliver digital transformation.

Digital Strategy
Digital Delivery
Digital Design
Innovation & Business Design
How can digital integrate with our business
strategy and leverage our proposition
and customer experience?
How can I overcome legacy IT platforms
and deliver technology change more quickly
and effectively?
How can I deliver new propositions to the
market and optimise the organisation structure
to enable digital change?
How can we design the customer experience
and optimise our channels to deliver new routes
to market and lower transaction costs?
?
Our clients typically start by getting these four areas right.

The four digital focus areas will need to be supported by a range of new capabilities – and to gain
the right pace you will need to build your digital capabilities as you go.

We make the difference
Claus Høyer Madsen
Partner, Head of Digital, Nordic
Tel: +45 39 25 50 00
Mobile: +45 40 70 60 35
E-mail: claus.hoyer.madsen@paconsulting.com
www.paconsulting.com/digitalbusiness
@GoDigitalPA

Setting up the organisational design for a new digital platform
How PA helped
Our team developed Worldpay’s digital strategy, defining their digital
objectives, and future state vision. In delivering their roadmap we:
• Undertook an Audit of all current capabilities and where key deficiencies
existed and benchmarked competitor analysis
• Initiated a future state view of what the experience should be like.
• Undertook a gap analysis of the capabilities needed vs those that
currently existed
• Outlined the roadmap in 3 phases ( fix, develop, grow) spanning a 3 year
period
• Delivered the outline 3 year business case with more detail for year 1.
Included detailed costs for the " fix" phase.
• Managed stakeholder engagement and defining linkages to the broader
new Worldpay Brand Programme.
We then supported implementation of their new digital platform.
The client issue
Worldpay are one of the world’s leading payment companies. They asked us
to help shape the future strategic and operational management of their new
digital estate.
The initial 12-week strategy engagement determined Worldpay’s digital
strategy and achieved Executive Team sign off for overall digital programme
and initial tranche of funding for Delivery Phase 1.
PA Consulting provided us with a great
combination of thinking and delivery. This went
from defining the types of digital capabilities we
would need to compete in our markets and reflect
our new brand positioning, through to the hands
on delivery of the first phase of our activity.
The team worked tirelessly to deliver the
solution, and their efforts have now helped us
show a more consistent, effective and engaging
face to our different audiences
across the globe.”
Chief Marketing Officer and Product Officer, WorldPay
“

Delivering digital transformation
The client issue
Royal London were embarking on a major brand transformation programme,
bringing together a number of siloed companies under a single new brand.
Their digital platforms had grown organically over a number of years, using
disparate systems and teams to manage a complex digital estate.
Royal London needed to ensure their digital presence supported their new
brand objectives.
How PA helped
PA successfully led Royal London’s Digital Transformation from strategy and
design to delivery. We then took responsibility to deliver some of the critical
workstreams while supporting others to achieve multiple outcomes. These
included:
• Development of an overarching digital strategy
• Approach to customer experience design
• Creating User Experience design patterns
• Creating requirements definition and test frameworks
• Managing 3rd party digital design companies
• Engaging with internal digital marketing teams on content migration
• Providing acceptance criteria and testing pre-production
• Providing "go-live" support
Setting up for success
PA also set up the governance and structure to manage the transformation
programme which included the establishment of a Working Group and
Steering Group consisting of Business Unit leads that acted as the decision-
making authority including implementing the Programme.
As separate brands started to integrate it was clear that Royal London's digital
organisation needed to be reviewed. Working across a range of stakeholders
and involving their Group Executive team, PA conducted:
• Analysis of business unit strategies, formulating an overall group strategy
• Analysis of operational units assessing skills, resources, demand and
programmes to identify gaps in delivery model
• Presenting a series of option "models" to which digital could be re-aligned
and serviced more effectively throughout the company
• Achieving sign-off from operating CEO's and Group CEO to implement
new target operating model
PA were instrumental in achieving delivery
of our brand transformation programme and
delivering our digital strategy, executing the
delivery whilst supporting our business and IT
teams throughout.”
Group Brand Director, Royal London Group
“

Transforming one of Sweden’s leading
insurance companies to a digital
customer service
PA was chosen to design and run a programme to
establish an Omni-channel approach for its
customer services. PA worked with the finance
company from the initial business case to the
implementation and Go-live of a new multi channel
customer centre.
Quality assuring the strategy and
organisational capabilities for a global bank to
deliver its Digital Transformation.
Within large and complex universal banks, the maturity of the
Digital agenda varies widely. Consequently this directly
affects the organisation’s ability to deliver on its digital
promises to all stakeholder groups. One of the principle
enablers of a successful transformation program is the ability
of the organisation to articulate a clear and connected
business strategy.
Helping a leading insurer to digitise
the payments process to reduce
transaction related costs.
PA helped the client with the design of a digital
payments solution which were in line with the
client’s strategy to migrate to a digital platform for
all customer engagement. As a result, automation
of transaction processing increased by 60-70%
greatly reducing costs and improving efficiency
and customer satisfaction.
Driving the digital transformation
for a Savings & Investment provider
PA supported Standard Life in a number of high-profile areas
of its transformation programme, including roadmap
development, programme shaping and delivery, cultural
change and reviewing the firm’s technology plans.
The work included developing a group-wide digital strategy
and significantly re-engineering Standard Life’s B2B digital
offerings, as well as developing a direct-to-consumer
capability.
Digitising Financial Services

PA has been invaluable to us through the launch of our new
website and development of new functions.
They have been fully integrated into our Online IT and Business
teams and have worked tirelessly alongside JL Partners to achieve
our £1 billion online target ahead of schedule and online sales
that are around 30% of total John Lewis revenues.
Paul Coby, IT Director, John Lewis
Our digital capability recognised

PA is a consulting, technology and
innovation firm. We define success as
achieving exceptional results that have a
lasting impact on businesses, communities
and individuals worldwide. This principle has
remained the cornerstone of our ethos for
over 70 years – and it continues to underpin
everything we do.
In the changing world of retirement, we are uniquely
positioned to inject rigour into business design,
partner selection, customer experience, data and
analytics which is underpinned by our experience in
Digital, Delivery, Assurance, Strategy and
Technology.
Our clients choose us because we challenge
convention to find the solutions that really work in
practice, not just on paper.
Over 100 digital consultants enable
us to serve our clients to enable
their digital transformation.
Supported by 2,500 consultants globally
Developers & Architects
Supply Chain Experts
IT & Business Analysts
Data & Decision Scientists
Hardware Engineers
User & Customer Experience Experts
Deep Sector Specialists
Programme Delivery Managers
Business Design Experts
Strategists

Contact Us
Claus Høyer Madsen
Partner, Head of Digital, Nordic
Tel: +45 39 25 50 00
Mobile: +45 40 70 60 35
E-mail: claus.hoyer.madsen@paconsulting.com
www.paconsulting.com/digitalbusiness
@GoDigitalPA
Corporate headquarters
123 Buckingham Palace Road
London SW1W 9SR
United Kingdom
Tel: +44 20 7730 9000
paconsulting.com
We Make the Difference
An employee-owned firm of over 2,500 people, we operate globally from
offices across the Americas, Europe, the Nordics, the Gulf and Asia Pacific.
Our deep industry knowledge together with skills in
management consulting, technology and innovation
allows us to challenge conventional thinking and deliver
exceptional results that have a lasting impact on
businesses, governments and communities worldwide.
Our clients choose us because we
don’t just believe in making a difference.
We believe in making the difference.
Amdi Hansen
Partner, Operational Excellence
Tel: +45 39 25 50 00
Mobile: +45 40 99 46 90
E-mail: amdi.hansen@paconsulting.com
Martin Tillisch
Partner, Financial Services
Tel: +45 39 25 50 00
Mobile: +45 40 99 46 42
E-mail: martin.tillisch@paconsulting.com

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