the connected insurance observatory

November 2016

Initiative presentation

Connected Insurance Observatory

2

The Observatory• Data provided by the Internet of Things represent an

extraordinary opportunity for Insurance Companies in order to:

- Improve risk selection

- Innovate pricing definition processes

- Sell additional services (following the de-risking process on several lines)

- Move from just paying claims to a more proactive role, fundamental element for profitability improvements

- Engage customers (enhance communication frequency and value)

• The most mature InsurTech use case is auto insurance telematics (already mainstream in some countries like Italy)

• The Connected Insurance Observatory is the first insurance think tank specialized in the insurance IoT domain:- It aggregated on the first 11 months of activity more than 25 European

Insurers, institution like ANIA (Italian National Association of Insurers) and almost 20 partners from the IoT ecosystem

- Since the beginning of 2017, the Observatory will start its operations in the US with a dedicated team lead by Matteo Carbone

• Connected Insurance Observatory is about connecting people and ideas in order to spread the innovation culture over the insurance market

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Connected Insurance is about connecting insurance with people and their risks

The Insurance IoT

Health… Industrial risksMotor… but also Home… Life…

Any insurance solution based

on sensors for collecting data on the state of an insured risk and telematics for

remote transmission and management of the data collected

Connected Insurance

4

It will not happen overnight –adoption requires defined sequential steps

5

The insurance telematics industry is still in the very early stages…

6

… but it is bound to change motor insurance around the world

0

20

40

60

80

100%

Italy UK U.S. Germany France

5 Very Likely

4

3

2

1 Not at All

Likely

"How likely would you be willing to agree to have a black box fitted in your car or a

driving app on your smartphone that would track position and driving behaviors in

order to receive services and a discount on your auto insurance premium?"

Source: Connected Insurance Observatory, Bain & Company, SSI

BIG CUSTOMERS BASE AROUND THE WORLD WILLING

TO USE TELEMATICS

INSURTECH TELEMATICS

START UPS GAINING SPEED

• Metromile is a variably-priced, pay-per-mile car insurance provider

• Last investment round ($191M) will be used to acquire Mosaic

Insurance – first insurtech start-up to acquire insurance incumbent

• NAUTO uses cameras, motion sensors and GPS systems, as well as

artificial intelligence software, to detect what is happening on the

road, as well as inside a car

• Big-name auto and insurance companies BMW, Toyota and Allianz

Group invested in the start-up and entered into data-sharing

partnerships

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RISK SELECTION:- Low risk customers acquisition and connected reduction in

fraudulent intents

- Underwriting process quality improvement

RISK-BASED PRICING- Usage-Based Insurance: pricing

definition process based on "quantity"

and "level" of risk exposure

LOYALTY AND "BEHAVIOR-STEERING"

- Loyalty systems based on detected customer

driving behavior

- Positive behavior

reinforcement

- Gamification

Connected insurance impacts the whole insurance value chain and generates real value for the insurance sector

SERVICES…

- …concerning policy information

- …having high value added for drivers

- …related to insurance cross-selling and

products connected to the insurance

contract

LOSS CONTROL

- Proactive intervention for claims

management

- Objective information about incidents

- Use of value-added services in order to

mitigate the risk/ prevent the loss

TelematicsValue

Creation

Source: Connected Insurance Observatory , Bain & Company

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Connected insurance: what is in it for insurers?

Improve insurance profit & loss through specialization and setup of partnerships

Enhance proximity and interaction frequency with the customer while creating new customer experience and offering additional services

Create and consolidate knowledge about the risks and the customer base

Frequency of interaction

Benefits on the insurance bottom line

Knowledge creation

1

2

3

Source: Connected Insurance Observatory , Bain & Company

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The scope of the Connected Insurance Observatory is the Insurance IoT

Objectives

Scouting and rationalizing

qualitative/quantitative

knowledge on Connected

Insurance

Sharing a critical point of view of

key trends and spreading

innovation culture

Encouraging stakeholders

discuss experiences and

exchange ideas about

innovation

The scopeAny insurance solution based

on sensors for collecting data on the state of an insured risk

and telematics for remote transmission and management of the data collected

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The 2016 European Connected Insurance Observatory in a nutshell

Insurance GroupsInvolved hundreds of executives

from more from 26 Insurers both at local level (Italian branch) and at

European Group Level

26

Institutions and PartnersSelected list of heterogeneous partners contributing to the insurance discussion about innovation with different angles

18

Plenary meetings3 full days of keynote speeches,

discussions, roundtable. A terrific networking opportunity

3

Hours of workshopMore than 130 "one to one" workshops (2-3 meeting dedicated to each company joined the Observatory)

280

5

Business insurance lines addressedUnique research based on innovation thought leadership and insurance acumen on all the insurance business lines

11

The 2016 European Observatory edition put together an impressive line of leading players

• Generali Group and Europe

Assistance

• Axa Group

• Zurich Group

• Allianz Global Assistance

• Reale Group

• Gruppo Poste Vita

• Groupama

• Gruppo Cattolica

• Sara

• Credit Agricole Assurance

• Helvetia

• HDI

• IMA Assistance

• Swiss Re

• Munich Re

• Scor

• RGA

• Cardif

• Chubb

• Ageas

• Avipop

• Filo Diretto

• ITAS

• RBM Salute

• La Parisienne

• AIOI NISSAY DOWA

• Italian National

Association of

Insurers (ANIA)

• Guidewire

• SSI

• DigitalTech

International

• Sysdata

• Neosurance

• Portolano Cavallo

• Venture Scanner

• InfoBlu

• Italian National

Association of

Brokers (AIBA)

• Appian

• Octo Telematics

• Vodafone

Automotive

• Aubay

• Eumetra Monterosa

• IRSA

• LoJack

• InsurTech News

Institutions and PartnersInsurance Groups

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Since the beginning of 2017, we will start also the North American Connected Insurance Observatory

The two Observatories together will create an impressive opportunity to

cross-fertilize the insurance innovation thoughts across geographies

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We address four thematic areas in each of the one to one workshops and the plenary meetings

The new challenge

of connected

insurance

The impact of connected

insurance on risk

selection and claims

Connected insurance:

customer relations and

customer engagement

The risks of connected

insurance: privacy, data

ownership, cyber risk

• Representation of the state of adoption

• Analysis of the challenges and opportunities , in place and in

perspective , of all the main business areas

• The impact of innovation:– on selection processes of differentiation and customization of risks

– on risk-based pricing approaches

– on loss control through the mitigation levers of risk and optimization

of claims management processes

• The connected insurance can:– change the relationship with customers

– improve understanding between contracting parties by reducing the

mutual information asymmetries

– provide value-added services

– increase loyalty and insured's empowerment in favor of behaviors

and lifestyles more aware and responsible

• Focus on the critical issues, constraints and operational tests

that the connected insurance foresees in terms of :– compliance

– information technology

– operational risks relating to managing security and confidentiality of

processed data

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The Observatory provide to the participants the best knowledge available worldwide on Connected Insurance

Scouting and rationalizing

quali/quantitative knowledge on Connected

Insurance

Observatory's topics Objectives

1. Collection of evidences concerning

connected insurance approaches

2. Researches on consumer expectation and on

distribution of connected insurance products

3.Best practice analysis with market benchmark

and international innovation scouting

4. Three annual collegial events in order to

share with Observatory's Stakeholders ideas

and experiences on connected insurance

5. 1to1 deep dive meetings (workshops) with

each Insurance Company to present and

discuss the Observatory's research

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Rationalize the knowledge and represent the state of the art of the innovation

Source: Connected Insurance Observatory's Research Reports

16


Scouting and structuring


Insurance

Sharing a critical point of view of key trends and spreading innovation

culture














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Give a critical review of the major trends, opportunities and pitfalls

Source: Connected Insurance Observatory's Research Reports

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Scouting and structuring


Insurance

Sharing a critical point of view of key trends and spreading innovation

culture

Encouraging stakeholders discuss experiences and

exchange ideas about innovation













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Stimulate the discussion on the key challenges common across the industry

Privacy Rules

Data portability

Data standardization

…

Data Ownership

Cyber risk

Connected insurance landscape

Motor Ecosystem

E-health Ecosystem

Insurance

Company

Client

Se

curi

ty

Th

erm

ost

atWater Detection

Smoke DetectionEnergy management

Appliances controlInfotainment

Wearable

Remote monitoring

Remote health advice

Sm

art

wa

tch

We

lln

ess

ap

p

Self quantification

EMRs

E-shop food & grocery

E-p

ha

rma

cy

Education

Navigation

Infotainment Road/park charging

Diagnostic & maintenance

Cra

sh a

ssis

tan

ce

Ed

uca

tio

neCalls

Stolen vehicle recovery

Domotics Ecosystem

Data

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The Observatory is dedicated to its members and it is available to support any participant to use the Observatory's contents and to boost their visibility

The Telegraph"Future of

Insurance" 2016 campaign

Octo Telematics

Italian AXA paper n.8

ITALIAN AXA FORUM

2016Axa

Telematics White Paper(expected by February '17)

Swiss Re

Bain Financial

Service BriefSeptember

'16Bain

The connected

and sustainable insuranceDecember

'16Connected Insurance

Observatory

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Some quotes from the participants to the 2016 edition

Thank you for providing a space where lots of insightful ideas about our industry could be shared

and discussed openly. I found the sessions very interesting!

System Integrator

Great platform for engage and discuss a wide range of topics and ideas that will impact all of us

in the insurance industry soon

Reinsurer

The Observatory created more value month by month…it is really useful have a systematic

representation of topics we deal with daily but we was missing to rationalize

Insurer

The initiative provided though-provoking contents. The deep dive sessions were clear and

stimulated great engagement within the organization

Insurer

Relevant opportunity to approach unique contents about connected insurance – both from

actuarial angle and customer angle - and to discuss them with Insurance Executives, Associations

and the Regulator

IT provider

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Contacts

Matteo Carbone

Principal in Bain & Company's Financial Services

Founder and Responsible of the Connected Insurance Observatory

Keynote speaker and writer on insurance innovation

Top 50 InsurTech Influencer (1° InsurTech Influencer by InsurtechNews, Top 10 InsTech

Influencer by InstechLondon, Top 15 IoT Influencer by Postscapes, Top 25 Disruptors in the

Insurance Industry by Vertafone)[email protected]

+393346220378

the connected insurance observatory

Economy & Finance