Driving Disruption: Transforming the Latin

American Insurance Sector

JUNE 25, 2013

Mike Fitzgerald

CELENT

CONFIDENTIALITY

Our clients industries are extremely competitive. The confidentiality of companies' plans and data is obviously critical.
CELENT will protect the confidentiality of all such client information.
Similarly, management consulting is a competitive business. We view our approaches and insights as proprietary and therefore
look to our clients to protect CELENT's interests in our presentations, methodologies and analytical techniques. Under no
circumstances should this material be shared with any third party without the written consent of CELENT.

Copyright CELENT

Program

Insurance innovation case studies

Insurance innovation current state surveys

Next steps

CELENT

Section 1 Insurance innovation case studies

The next 10 years?

@
2014
Replacement
human organ
created with
3D Printer

2014

Commercial
space flight

DNA sequencing
for $100

2014

CELENT

2016

Social
Commerce

Widespread use of 3D
manufacturing

2015

2020
Simple tasks done
by location aware
drones

Instant Charge
Batteries

2018

2020

Smart energy
meters and smart
grids

Electric
highway

2020

Crash-proof
car

2020

Insurance innovations
FNOL reporting

Multi tiered pricing

D&O/Employers Liability
Direct/Internet selling

Predictive modeling
UBI

CELENT

5 2013
June 25,

Three key technology themes changing the competitive

landscape for insurance

Ubiquitous data

User expectations of simplicity and technology doing more of the work

Industrialisation of IT at scale

CELENT

Its not just people sharing more and more data

2012

2008
Connected
things
People

2003

2010

2015
2020

20 houses today generate more traffic than the entire

Internet did in 2008

The number of things connected to

the Internet is greater than the
Earths population

Source: Cisco, 2011

CELENT

From the beginning of time

until 2003, we created five
exabytes of data.
In 2011 the same amount was
created every two years. By
2013 its expected to shrink to
10 minutes
The Human Face of Big Data, Publisher: Sterling. 2012

Insurers face a torrent of location tagged data

Fashion
Sports

Fa
Sp
sh
ort
io
s
n
Fa
Sp
sh
ort
io
s
n

CELENT

Fa
Sp
sh
ort
io
s
n

The UK Riots, 2011

Over four days between Saturday

6th August and Tuesday 9th August:
$320 MM damage (Source: ABI)
Up to 15 K rioters

~5 K crimes recorded
~30 towns

Spontaneous events orchestrated

via social media

CELENT

10

AXA used publicly available data to better predict its exposure

and improve customer service
Social Media Data made public
by Guardian.co.uk

Police Reports

Sample Screen Shot

Lighter areas show locations of riot activity

CELENT

Internal data
(exposure, claims)

Screen Shot with further detail

11

The results
Using the tools AXA could see:
Claims that fell within the affected areas
Claims that fell outside the affected areas
Customers with locations inside the affected areas who
had not yet claimed

Discovery

Capture

Reaching out to customers meant AXA could

Locate
Extract
Move

Offer great customer service

Offer a view of the total exposure much earlier than
would be typical

Understand the full liability of the UK government under

the Riots Act in the short window allotted

Where
What/Who
When

Linking

Testing

Accuracy
Validity
Credibility

Lessons learnt
Obtain databoth internal and external

Relevant data
Useful data
Gap-fillers

Visualization

Exploration
Redefinition

Provide access to it in a usable format

Visualize it in a way that was meaningful to the team
Allow changes to the system over time to increase
its potential

CELENT

Insight

New information
Revealed assumptions
New gaps

12

User expectations technology will do more of the work

Understand and
respond to what is said

Understand
what is said
in the context
of what is
visible

Perform
image
recognition
on videos
and pictures

Allow applications to
augment their vocabulary
and services

CELENT

13

The industry engages consumers differently as a result

Paper 200+ years

Voice 15 years

Digital 2-4 years

The multi-page forms we

know and love

Insurance in a conversation

Personal, business and life

insurance available online
and on mobile

Days or weeks for a quote

Quote in minutes

10s of quotes in minutes

Foot or mail

Phone

Anytime, Anywhere

CELENT

14

Explain why you prefer the service methods you chose

CELENT

15

One-time insurance
Short-term simple insurance sold via mobile phone
in Japan to cover potential risks from sporadic and
short-term events
Lines: Sport, travel insurance and one day auto
Tokio Marine & Nichido, through its partnership
with NTT Docomo, Japan's largest mobile carrier

Coverage tend to be for short periods like one day,

and usually around a few hundred yen in price
(US$4.00)
Docomo handles sales and premium payments,
Tokio Marine & Nichido responsible for u/w policies
and dealing with claims procedures
NTT Docomo automatically fills information about
its subscribers from its database
Customer only specifies the insurance type and
time period
Premium is included in the subscriber's phone bill

Goal: Cultivate the untapped market for small-amount, short-term insurance and
attract a new customer segment that typically does not have an interest in insurance
CELENT

16

Process one day auto insurance

Pre-register

Buy

Pay

Premium is added on
the monthly mobile
phone bill

Read QR Code
(agency code embedded)

CELENT

Register
Name
Birthday
Address
e-mail address
Drivers License No.
License expiry date

Input
License plate No.
Date of driving

17

Leveraging location awareness

Auto GPS function (Position-aware active recommendation)

CELENT

18

Industrialization of IT moving from inside-out to outside-in

19701995

19952012

20132017

Channel systems
Orchestration
All-in-one
application
Product systems

Enterprise systems
Data

Vertical application
Bespoke build
Transaction oriented
Single channel
Internal user focused
Hosted internally
Employed internal team

CELENT

Data

Multiple distributed applications

Mix of package and
bespoke build
Service oriented/open
Multi-channel
External and internal user
focused
Hosted externally
Mix of insourced/
outsourced team

All applications are treated as

external services
Interfaces and SLAs are
managed similarly across
all services
Business processes are
orchestrated across
heterogeneous services
Service selection is a joint
business/IT responsibility
19

Section 2 Insurance innovation current state

At my company, successful innovation is...

70%

60%
50%
40%
30%
20%
10%

0%
Critical to our strategy

CELENT

Important to our strategy

21

Rate how expectations of these groups regarding the use of

technology in insurance has changed in the last five years

Prospective policyholders

Agents / distribution
channels

Higher expectations

CELENT

Existing policyholders

About the same

Regulators

Lower expectations

22

Compared with other industries, insurance companies

successfully innovate...

6%
14%

Much worse

Better

28%

52%
Worse

About
the same

CELENT

23

Compared with other insurance companies, my insurance

company successfully innovates...

4%
14%

Much better

Worse

36%
Better

CELENT

46%
About
the same

24

The bar is delightfully low

Please rank the following industries in terms of their ability to deliver a great shopping
or service experience by smart use of technology
Online Retailers

2,65

Traditional Retailers With Web Sites

4,14

Banks

4,17

Telecommunications
Utilities

5,41

Healthcare Providers

6,37

Securities & Investments Firms

6,43

Insurance Companies

6,48

Traditional Retailers Without Web

Government

CELENT

4,82

7,12
7,40

25

Section 3 Next steps

Action steps
Find opportunities to innovate in your existing project portfolio

Understand that investment in Technology Innovation must ultimately lead

to Business Innovation
Don't only benchmark vs. other insurers; look at your customer's ecosystem
instead
Expect resistance. Innovation is risky, scary but in the end rewarding

Don't despair but get started now

CELENT

27

The surveys will be open until July 10 so that you can complete it if not
already done so. We will share with you the final results through the email
address you provide when you complete it.
Survey:
https://www.surveymonkey.com/s/InsuranceTechLATAM2013InnovationinInsu
ranceEnglish
Feel free to contact me at mfitzgerald@celent.com

@mikefitz01

QUALIFICATIONS,
ASSUMPTIONS AND LIMITING
CONDITIONS

This report is for the exclusive use of the CELENT client named herein. This report is not intended for general circulation or
publication, nor is it to be reproduced, quoted or distributed for any purpose without the prior written permission of CELENT.
There are no third party beneficiaries with respect to this report, and CELENT does not accept any liability to any third party.

Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been
independently verified, unless otherwise expressly indicated. Public information and industry and statistical data are from sources
we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information. The
findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are
subject to inherent risks and uncertainties. CELENT accepts no responsibility for actual results or future events.
The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation
is assumed to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof.
All decisions in connection with the implementation or use of advice or recommendations contained in this report are the sole
responsibility of the client. This report does not represent investment advice nor does it provide an opinion regarding the fairness
of any transaction to any and all parties.