This is a presentation given by Hugh Terry from The Digital Insurer at the InsurTech Asia conference in Singapore in April 2017

1. Hugh
Terry,
The
Digital
Insurer
InsurTech
Asia,
April
27th 2017,
Singapore
DIGITAL
DISTRIBUTION
TRENDS

2. Discussion
agenda
1 Distribution
in
Context
2 Digital
Distribution
– some
success
stories
4
2
Standout
distribution
opportunities
in
Asia
3

3. 3
3
Presentation:
3
Key
messages
3
1. Distribution
/
customer
access
remains
king
2. Data
is
gold
for
insurance
distributors
3. It
is
an
open
field
– but
not
a
level
field…

4. 44
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5. 5
5
What
does
The
Digital
Insurer
do?
5
We
are
fully
vested
into
all
things
digital
insurance
• Media
&
thought
leadership
• Information
services
• Advisory
• Actively
building
new
digital
businesses

6. Discussion
agenda
1 Distribution
in
Context
2 Digital
Distribution
– some
success
stories
4
6
5
distribution
opportunities
in
Asia
3

7. Distribution
in
a
strategic
context
7
1

8. Three
digital
“Mega”
trends
:
forces
beyond
our
control
2
Technology
is
cheaper
and
easier
to
implement
than
ever
– it
is
the
fulcrum
to
meet
consumer
needs,
reduce
operating
costs
and
to
change
your
culture
1
8
Data
matters– we
are
collecting
more
and
more
data
that
can
be
used
to
create
winning
business
models
3
Changing
consumer
behaviour
–
they
are
more
demanding
and
looking
for
a
different
experience

9. 9
9
Digital
Disruption
– the
gold
mine
analogy
9
Miners
&
Pickaxes

10. 10
10
Digital
Disruption
10
Miners + Pickaxes
(distribution
“value
driver”) (New
Tech
“
enablers”)
Digital
Business
Models
….Both
generating
and
using
lots
of
data
‘gold’
The
Prospector’s
dilemma
– as
soon
as
the
“seam”
is
proven
prices
rise
very
quickly

11. 11
11
Analogy
:
How
far
could
bank
disruption
go?
11
FT HEADLINE: “MCKINSEY WARNS BANKS FACE WIPEOUT
IN SOME FINANCIAL SERVICES”
Source:
Financial
Times,
30th September
2015
-­‐ quoting
from
McKinsey
annual
global
banking
review
Origination
&
sales
activities
US$1.7
trillion
revenue
22% ROE
Balance
sheet
provision
US$2.1
trillion
revenue
6%
ROE
“A
high
stakes
struggle… either
banks
fight
for
the
customer
relationship,
or
they
learn
to
live
without
it
and
become
a
lean
provider
of
white-­‐labelled
balance
sheet
capacity.”
V’s
No
surprises:
under
attack
from
digital
disruptors
e.g.
predicting
profits
from
car
loans
and
credit
card
loans
to
fall
by
60%

12. 12
12
InsurTech:
distribution
plays
also
proving
popular
with
start-­‐ups
12Source:
MckInsey
April
2017
:
http://www.mckinsey.com/industries/financial-­‐services/our-­‐insights/time-­‐for-­‐insurance-­‐companies-­‐to-­‐face-­‐digital-­‐reality
• Distribution
focus
for
>35%
of
start-­‐ups

13. 8 Digital
distribution
models:
breaking
down
the
value
chain
13
Acquire
New
Customers Selling
to
Customers Servicing
Customers Taking
Product
Risk
2.
Bancassurance
InsurerBank
1.
Traditional
Agency
Insurer
3.
Digital
/
Direct
Insurer
5.
Digital
Managing
Agents Single
Insurer
4.
Price
Comparison
Sites Multiple
Insurers
6.
Digital
Broker Multiple
Insurers
7.
Digital
Affinity Multiple
ProvidersAffinity
Partner
8.
Eco-­‐systems Insurer(s)
13
the
insurer
Maybe
the
insurer
NOT
the
insurer
Owned
by

14. 14
14
Opportunity
&
Challenge
14
Across
Asia
80-­‐90%
of
Insurance
is
face-­‐to-­‐face
via
agents,
brokers
or
banks

15. 15
15
Disruption
in
the
insurance
industry:
“
Trading
Places”
15
Insurers
buy
aggregators
Insurers
buy
TPA’s
Retailer
invest
in
aggregators
Tech
companies
startup
insurers
Reinsurers
invest
in
insurers
Airlines,
Telco
and
Tech
co’s
setup
insurers

16. The
Opportunity
Agenda
in
Asia:
“Now”
Opportunities
driven
from
the
current
paradigm
16
Product Narrowly
defined
view
of
product
Distribution
Too
much
face-­‐to-­‐
face
Customer
Experience
Not
good
enough
Certainly
Not
“Omni” Digital
will
redefine
our
industry
.
It
is
early
days..
Digital
enables
Distribution,
Product
and
Customer
Experience
innovation

17. 17
Convenient
&
Supportive
Simple
to
use
and
supportive
throughout
the
customer’s
life
2.
Value
Added
Services
(with
partners)
Personalized
and
catered
to
the
customer’s
habits
and
lifestyles.
Integrated
with
other
value
added
services.
Leveraging
the
power
of
“free”
1.
Reducing
customers
Risks
Solutions
that
make
our
customers
safer
/
healthier
– and
also
reduce
their
costs
of
insurance
How
Quick
will
it
be
before
insurance
risk
is
a
sub-­‐component
in
a
larger
service
offering?
Ø Looking
through
the
jargon
there
is
a
fundamental
change
in
product
design
in
the
insurance
industry
Product
design:
trending
to
“Eco-­‐system
Proposition”

18. Consumers:
ahead
of
the
industry?
Chart
Source
:
Noble
Oak
Australia
,
Consumer
Survey
2016 18

19. 19
19
Insurance
as
a
complement:
but
not
complimentary
19
Reminder
:
Insurance
is
nearly
always
a
secondary
purchase
Insurers
will
generate
sustainable
profits
by
finding
privileged
distribution
channels
–e.g.
selling
drinks
in
a
restaurant
or
at
a
hawker
centre
in
Singapore
There
is
a
role
for
free
services
– to
get
closer
to
the
source
of
demand
for
insurance

20. Digital
Distribution
– Some
success
stories
20
2

21. Digital
Distribution
Models
@
Price
Comparison
2121
Price
Comparison
Eco-­‐Systems
Digital
Affinity
21
21
21
Digital
Brokers
Face
–to
-­‐face
Direct

22. Aggregators:
Bank
Bazaar
22
Key
points
• Full
service
aggregator
– banking
,
life
and
P&C
• “Search
for
free”
• Amazon
Ventures
invested
US$60
million
Q.
How
will
Amazon
expand
into
financial
services?
D
P
C

23. Aggregators:
Go
Bear
23
Key
points
• “Meta
Search”
Aggregator
– delivers
leads
to
insurers
and
banks
• Aegon
is
a
shareholder
• Expanding
across
South
East
Asia
.
Life
and
Health
offering
in
early
stage
(Singapore
in
2017)
D
P
C
South
East
Asia

24. Aggregators:
Life
Broker
24
Key
points
• Full
service
aggregator
– policy
purchase
from
Life
Broker
possible
• Owned
by
Dai-­‐ichi
Life
(TAL)
–
Purchased
from
broking
company
who
established
it
D
P
C

25. Digital
Distribution
Models
@
Digital
Brokers
2525
Price
Comparison
Eco-­‐Systems
Digital
Affinity
Digital
Brokers
25
25
25

26. 26
26
Bought
By
Many
– long
tail
insurance
opportunity
26
2
6
Volume
per
category
Insurance
Categories
Mainstream ‘head’
Served by price-­
comparison websites
and insurers direct
‘Long Tail’ of Insurance Demand
Traditionally served by
small face-­to-­face brokers
Target for Bought by Many
“Car Insurance”
“Home Insurance”
“Pet Insurance for French Bulldog”
“Travel Insurance with Diabetes Type 2”
“Young Driver car insurance”
Volume per category of insurance demand
2
6
~40% of insurance premiums are in the “long-­
tail” but niche consumer needs are neglected
by price-­comparison websites
PingAn
partnership
on
We
Chat

27. Key
points
Digital
Broker
Model:
Connexions
Asia
(CXA)
27
Broker
+
wellness
platform
Well
financed
Expanding
out
of
Singapore
27
27
27
Q.Employee
Benefit
Broker
as
the
healthcare
eco-­‐system
owner
/
lead
enabler?
D
P
C

28. Digital
Distribution
Models
@Digital
Affinity
2828
Price
Comparison
/
Digital
Brokers
Digital
Affinity
Price
Comparison
Eco-­‐Systems
Digital
Brokers
28
28
28

29. Digital
Affinity
Model:
BIMA
29
Accessing
airtime
as
the
method
of
payment
Low
cost
fulfillment
and
ease
of
access
Penetrating
new
markets
Mobile
Microinsurance
292929
Q.
Many
Insurers
don’t
have
D2C
mobile
platforms
with
payment
connectivity.
Opportunity?
D
P
C
Africa,
Asia
&
LatAm

30. 30
30
Digital
Affinity
model:
Microensure
3030
Q.
Is
Micro
insurance
going
to
be
an
effective
customer
acquisition
strategy?
Insurance
&
Finance
AXA
owns
46%
More
than
20
million
customers
Mobile
Microinsurance
Africa,
Asia
&
LatAm
D
P
C

31. Distribution
models
@Digital
Eco-­‐systems
3131
Price
Comparison
Eco-­‐Systems
Digital
Affinity
Digital
Brokers
31
31
31

32. 32
32
32
https://vimeo.com/192190135
Organize
&
track
everything
about
the
things
you
own!!
Automatically
adds
the
things
you’re
buying!
Principle
Value’s
● It’s
On
Demand.
● You
can
insure
single
items
● Customers
are
not
locked
-­‐in
to
contracts
● Disintermediation
(a
reduction
in
talking
to
human
customer
services)
● Upload
items
to
the
mobile
app.
● Choose
level
of
cover
&
insure
it
by
swiping
right.
● Pay
daily
rates
for
as
many
items
you
want
to
protect.
● Swipe
Left
to
stop
your
cover,
at
anytime
with
no
opt-­‐out
penalties.
Covered
against
Accidental
Damage,
Loss
&
Theft.
Q.
Will
Trov
succeed
in
creating
an
eco-­‐system
”inventory
of
things”?
Inventory
of
things
Eco-­‐system:
TROV

33. 33
>70
million
registered
users
>1,000
full
time
doctors
Access
to
50,000
contracted
doctors
and
5,000
specialists
7/24/365
access
including
video
consultant
Online
to
Offline
platform
(O2O)
Find
a
Doctor
• May
2016
:
US$500
million
series
A
funding
• Goal
of
creating
largest
“closed”
healthcare
eco-­‐system
• =
“
Internet
healthcare
2.0”
D
P
C
Eco-­‐system
model:
Good
Doctor
(Ping
An)

34. Digital
eco-­‐system
potential:
ACORNS
34
Round
up
your
credit
card
transactions
Robo
investment
into
ETF’s
(5
risk
adjusted
funds)
0.25%
fee
/
US$1
per
month
(<US$5K)
850,000+
users
US$150
million
invested
Mobile
Micro-­‐investment
D
P
C
34
34
34
34
34
34
Q.
Insurance
Distribution
opportunity?
Opportunity
to
unbundle
the
endowment
in
Asia?

35. 35
35
Digital
Ecosystem
model:
ZhongAn
3535
>
1
billion
policies
!
Big,
big
data
play
All
in
3
years
Innovative
product
design
IPO
in
2017
possible
Last
valuation
US$8
billion
Digital
Affinity
Started
in
November
2013…
First
online
insurance
seller
in
China
Advanced
cloud
computing
system
Selling
its
#1
product
through
C2C
Taobao
Major
shareholders
are
Alibaba,
Tencent
and
Ping
AnD
P
C

36. Key
messages
&
5
opportunities
in
Asia
36
3

37. 37
37
Presentation:
3
Key
messages
37
1. Distribution
/
customer
access
remains
king
2. Data
is
gold
for
insurance
distributors
3. It
is
an
open
field
– but
not
a
level
field…

38. 38
38
“winner
takes
most”
:
also
true
in
insurance
38Source:
MckInsey
April
2017
:
http://www.mckinsey.com/industries/financial-­‐services/our-­‐insights/time-­‐for-­‐insurance-­‐companies-­‐to-­‐face-­‐digital-­‐reality
Lessons
learnt
• Aim
to
be
first
• Achieve
scale
quickly
The
un-­‐level
playing
field….
Companies
with
digital
connectivity
and
strong
brands
are
well
placed

39. 39
39
The
distribution
playing
field
is
not
level…
39
1. Incumbents
– really
difficult
to
build
on
legacy
2. Typical
startup
– limited
access
to
clients,
Regulatory
challenges,
capital
constrained
3. Digital
Brands
with
large
client-­‐base
– sweet
spot
for
distribution
partnership
or
green
field
– key
enabler

40. 5
standout
distribution
opportunities
in
Asia
40
5.
Digital
bancasssurance:
“BFF”
with
banks
4.
Digital
First
Life
insurance
models
to
disrupt
agency
3.
Healthcare
eco-­‐system
2.
Small
Business
Opportunities
1.
“Digital
Brand”
Partnerships

41. 41
41
Thanks
!
41
Wishing
you
good
speed
on
your
own
digital
adventures!
hugh.terry@the-­‐digital-­‐insurer.com
www.the-­‐digital-­‐insurer.com

42. 42
42
TDI
Is
well
established
42

43. 43
43
The
Digital
Insurer
Global
Leadership
Team
43
•Hugh
is
the
founder
of
The
Digital
Insurer
and
is
passionate
about
the
use
of
digital
thinking
and
technology
to
transform
the
insurance
industry
Hugh Terry
•Les
is
responsible
for
TDI
in
Europe.
He
is
able
to
draw
on
over
30
years'
experience
in
the
insurance
industry
with
leading
insurers
and
brokers
as
both
a
senior
executive
and
consultant.
Les Wong
•Andrew
is
responsible
for
TDI
in
Africa.
He
is
convinced
that
digitally
based
business
models
are
a
prerequisite
to
making
insurance
benefits
accessible
to
all
Andrew de
Kock
•Rick
is
a
thought
leader
within
the
global
InsurTech
startup
community.
Rick
contributes
regular
articles
on
InsurTech
and
is
chairman
of
the
Digital
Insurer
Rick
Huckstep
•Andrew
is
responsible
for
TDI
in
AUS
and
NZ.
He
is
our
resident
global
telematics
expert
and
is
always
at
the
forefront
of
technological
innovation
Andrew
Dart
•As
COO
Malini
is
responsible
for
content
delivery
and
key
client
relationships
for
TDI.
She
is
fascinated
by
the
potential
of
technology
to
transform
&
disrupt
insurance.
Malini
Thakerar
•Tom
is
responsible
for
developing
TDI
in
North
America.
He
has
a
wealth
of
consulting
experience
and
is
also
the
editor
of
the
Digital
Insurance
Library
section.
Tom
Bobrowski