allianz global corporate & specialty se future and ... · machinery breakdown and bi frequency...

Disruptive technologies and their impact on

Risks Management and insurance

Head of Emerging Trends / Michael Bruch /

Insurance Institute of Gauteng (IIG)

Broker Leadership Forum

Johannesburg 17 May 2018

FUTURE AND

LONGTERM RISKS

Allianz Global Corporate & Specialty SE

Copyright © 2018 Allianz Global Corporate & Specialty SE (All rights reserved)File name | department | author

2

CONTENT

TOPICS01 INDUSTRY 4.0

02 DISRUPTIVE TECHNOLOGIES ON THE RISE

03 TOP BUSINESS AND FUTURE LONG TERM RISKS

04 IMPACTS ON THE INSURANCE VALUE CHAIN

05 SUMMARY


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Photos: Shutterstock

01INDUSTRY 4.0


4

INTRODUCTION

Introduction

Source: https://www.youtube.com/watch?v=MZkY9HNCiM0

https://www.youtube.com/watch?v=MZkY9HNCiM0

https://www.youtube.com/watch?v=MZkY9HNCiM0


5

WHERE IS THE VALUE POTENTIAL OF THE INTERNET

OF THINGS?

New value potential for our clients

Vehicles

Autonomous vehicles and condition-based maintenance

$210Bn–740Bn

Cities

Public health and transportation

$930Bn–1.7Tn

Outside

Logistics and navigation

$560Bn–850Bn

Human

Health and fitness

$170Bn–1.6Tn

Offices

Security and energy

$70Bn–150Bn

Factories

Operations and equipment optimization

$1.2Tn–3.7Tn

Retail environments

Automated checkout

$410Bn–1.2Tn

Worksites

Operations optimization/health and safety

$160Bn–930Bn

Home

Chore automation and security

$200Bn–350Bn

9 settingsGave us a cross-sector view

of a total potential impact of

$3.9Tn–11.1Tn per year in 2025

https://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwjej42utuzaAhVEYlAKHWxRD_EQjRx6BAgBEAU&url=https://gblogs.cisco.com/ca/2017/06/09/are-canadian-manufacturers-ready-for-industry-4-0-sadly-the-answer-is-no/&psig=AOvVaw3O9C-R7Gyb8oLsRDmP6fvj&ust=1525535922185948


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BUSINESS OPPORTUNITIES ARE EXPLOITED ALREADY

TODAY

New value potential for our clients

Eliminating inefficiencies and product defects

At Siemens' Amberg Electronics Plant, where IT systems control and optimize processes, production quality is 15 defects per million, which are

detected, enjoys a 99.99885 % reliability rate and 100% traceability.

Reduction of machine downtime – Predictive Maintenance

Volkswagen realized an improvement of 15% in machine downtime in factories. Predictive analytics foresaw the failure of certain components

that caused outages.

Automation of work

The BMW i3 plant in Leipzig can be considered an early example of the smart automated plant archetype, as it is an integrated and highly

automated plant. Robots are used at each stage of production, including the body shop.

Forecasting accuracy

Big Data analytics involves vast data volumes from new data sources for more precise outcome. For example, Hadoop Platform provides a way

to start using the vast amount of unstructured and semi-structured data that organizations have.

Lower emissions and waste and more sustainable use of resources

Parker Water & Sanitation, US, has optimized a much more sustainable use of water by monitoring water flows, water pressure and leaks in the

system. The customers can allow their irrigation activities to be automatically managed by sensors, which also record the amount of rainfall.


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Societal impact

The value of improved health of chronic disease patients through remote monitoring could be as much as $1.1Tn

per year in 2025


9

POTENTIAL “WINNER AND LOSER” INDUSTRIES

What drives Industry 4.0?

▪ IT and Electronics

▪ Automotive

▪ Transportation and

Logistics

▪ Healthcare

▪ Energy

▪ Retail

▪ Telecommunications

and Media

▪ Finance

▪ Construction


10

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02DISRUPTIVE TECHNOLOGIES

AND PLATFORMS

ON THE RISE


11

FROM “WEAK” TO “STRONG” AIAI IS A SOFTWARE THAT EXHIBITS ANALYTICAL, DECISION-MAKING AND LEARNING ABILITIES

SIMILAR TO THOSE OF HUMANS.

What is Artificial Intelligence?


“Strong” AI

agents are

expected on

the market

around 2040

https://www.youtube.com/watch?v=bd1mEm2Fy08


12

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Autonomous vehicles are expected to be

the most influential AI application in

future

The penetration rate for autonomous

vehicles is expected to reach 5% by

2030

AUTONOMOUS

VEHICLES



13

Mobility ProviderClaimant

CASE STUDY: AUTONOMOUS VEHICLESHOW IT LOOKS AT PRESENT

Top risks in Focus


Driver Car Owner

Car Insurer

Products Liability

Insurer


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Mobility ProviderClaimant

CASE STUDY: AUTONOMOUS VEHICLESWITH AUTOMATED DRIVING ON THE RISE, WE HAVE SIGNIFICANT INCREASE OF PLAYERS!

Top risks in Focus


Driver Car Owner

Accredited certifier

OEM

Supplier Software

Supplier Hardware

1st tier Supplier

Claims Service Provider

Assistance Provider

Liability Insurer (OEM)

Car Insurer

Network Provider Data Centre


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Benefits Complications Implications

• Reduction of road accidents

by 90%

• Monetary benefits between

$2,000 to $4,000 per year, per

vehicle

CASE STUDY: AUTONOMOUS VEHICLES

Case Study


• Sophisticated combinations of

sensors and AI software

• But for certain decisions there

are no established universal rules

• Make roads safer

• Risks may require new types of

coverage

• New product liability coverages

will be needed


16

PLATFORM BUSINESS GETS MORE IMPORTANTCOMING NOW: SMART INDUSTRIAL PLATFORMS

Advanced analytics &

Machine LearningBig data platform Adaptive security

Factories

Cities

Mobility

Agriculture

Health

Homes

Retail

Things &

Agents

(Industrial)

Gateways


17

03TOP BUSINESS FUTURE

LONG-TERM RISKS



18

TOP 10 GLOBAL BUSINESS RISKS FOR 2018

Top Business Risks

Source: Allianz Global Corporate & Specialty. Figures represent the number of risks selected as a percentage of all survey responses (2,376). The 1,911 respondents could provide answers for up to two industries and up to three risks per industry.

Photos: Adobe

Cyber incidents(e.g., cyber crime, IT failure, data breaches)

240%

2017: 30% (3)

Natural catastrophes(e.g., storm, flood, earthquake)

330%

2017: 24% (4)

142%

Business interruption(incl. supply chain interruption)

2017: 37% (1)=

Market developments(e.g., volatility, intensified competition/new

entrants, M&A, market stagnation, market

fluctuation)

422%

2017: 31% (2)

Changes in legislation and regulation(e.g., government change, economic sanctions,

protectionism, Brexit, Euro-zone disintegration)

521%

2017: 24% (5)=

Fire, explosion

620%

2017: 16% (7)

New technologies

(e.g., impact of increasing interconnectivity,

nano-technology, artificial intelligence, 3D

printing, drone)

715%

2017: 12% (10)

Loss of reputation or brand value

813%

2017: 13% (9)

Political risks and violence

(e.g., war, terrorism, civil commotion)

911%

2017: 14% (8)

Climate change/increasing

volatility of weather

1010%

NEW

https://www.youtube.com/watch?v=twtGFn1NxB4&feature=youtu.be


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4 THESESTHE SMART FACTORY AND ITS IMPLICATIONS FOR BUSINESS INTERRUPTION

Top risks in Focus

Machinery Breakdown and BI frequency losses will be reduced due to flexible production processes

and automated maintenance

Some Cyber events will be as severe as major CAT events

Non-damage BI losses will increase significantly

Most Cyber BI losses will be caused by human error or technical failure and not by Cyber attacks


20

WHICH JOBS ARE SUSCEPTIBLE TO COMPUTERISATION?

Societal impact

The top 10 most likely jobs to be automated include

telemarketers, insurance underwriters, claims adjusters,

watch repairers and accountants’ clerks

“Growth in field services, asset management, robotic

maintenance, remote diagnostics and analytics

expertise will off-set job losses due to the proliferation of

IoT”.

Oxford University, the future of employment

Source: http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf


21


04IMPACTS ON RISK

MANAGEMENT AND THE

INSURANCE VALUE CHAIN


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RISK LANDSCAPE WILL CHANGE – INSURERS AND THEIR CLIENTS

HAVE TO REVIEW INSURANCE AND RISK MITIGATION NEEDS

Impact and new opportunities for Risk Management

Topic Impacted Insurance cover Impact for segment Why?

Predictive Maintenance • Machinery Breakdown

• Business Interruption

• Property Damage

• Product Liability

• Environmental Liability

Predictive maintenance improves productivity and equipment

lifetime by avoiding breakdowns. The reduced claims payments

will be outbalanced by the lower premium income.

Operations optimization • Product liability


• Crop Insurance

• D&O

By getting a full overview of the production process and making

real-time adjustments, production downtime and product

defects can be avoided.

Inventory optimization • Marine Cargo

• Property Damage

• Business interruption

Automated replenishment of stocks helps to reduce inventories.

Shipments and supply chain risks (more large and complex

claims) will increase.

Health and Safety • Workers Compensation

• General Liability

Autonomous machines, sensors and tags for workers can

prevent accidents and limit exposure to dangerous materials.

Cyber Risks • Cyber Risk coverage


• Intellectual Property

Increased cybersecurity risks as each device is a potential entry

point for data breaches and interconnectivity can spread the

damage significantly. This will create high accumulation

potential but will also fuel the demand for specific e.g., cyber

insurance solutions.

10–40% cost savings

5–12.5% cost reduction

20–50% cost reduction

10–25% savings


23

CYBER ARTIFICIAL INTELLIGENCE

Cyber AI

Impact on insurance Targeted use for UW

• Better detecting attacks, but also increased risk if

malicious hackers are able to take control

• More serious incidents to occur by lowering the cost of

devising cyber-attacks

• While demand for insurance cover is increasing, cyber

BI/CBI is a relatively untested area

Our cooperation partner Cyence assesses both cyber

exposures and a company’s cyber resilience

The platform enables AGCS’ Cyber UW:

• to quickly produce individual cyber risks profiles to improve

the underwriting of each customer

• to manage the risk accumulation

• to enhance the cyber underwriting expertise


24

IMPACT OF AI ON THE INSURANCE VALUE CHAIN

Impact on the insurance value chain

• Individualized

campaign

generation

• Market analysis and

forecasting

Customer/Market

Management

Customer

Advisory

• Needs discovery

• Product

recommendation

Policy

Purchasing

• Streamlined order

processing

• Credit analysis and

fraud detection

Policy

Serving

• Bot-based

customer servicing

• Automated portfolio

management

Underwriting

and Claims

• Smart claims

processing

• Big-data-driven risk

management

“Weak” AI applications with direct impact on the insurance value chain


25

DIGITAL AGENDA: SELECTED PROJECTS FROM AGCSTECHNOLOGIES TO ENHANCE EFFICIENCY AND CUSTOMER SERVICES

Blockchain

ART solution for the existing captive insurance program and transacting a natural

catastrophe swap1) see video „Allianz pioneers blockchain prototype for the captive insurance market”

Robotic Process Automation

AGCS robotic process automation bots perform repeatable rules based tasks (data entry

and extraction or policy administration) and cut normal processing time by around 90%

compared to manual entry with a zero error rate.

Claims technology

Current AGCS claims handling pilots include live stream loss adjusting app, drones

services and aerial information platform, a digital defense lawyer toolkit, a

thermographic imaging initiative as well as a chat bot project.

1) https://www.youtube.com/watch?v=K4aCtX2NuWY&feature=youtu.be

https://www.youtube.com/watch?v=K4aCtX2NuWY&feature=youtu.be


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760 bn US$ Market Capital

197 bn US$ Total Assets

Market Value of 10 top Brands ($Bn)

0

100

200

300

400 Intangible Value Tangible Value

(NEW) RISKS THAT MATTER: WHY PROTECTING

INTANGIBLE ASSETS?

64%of the total value of UK

firms is in intangibles

50%of companies cite brand

risk as their top risk

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwi2nqCwjunPAhVLCZoKHZTJBtAQjRwIBw&url=http://www.seattlecoderdojo.com/wp-content/uploads/2014/07/&bvm=bv.136499718,d.bGg&psig=AFQjCNEchVxV0S6HOZrNwQHQ3B4FtelTsw&ust=1477043606506352

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiv0uHGjunPAhVHlCwKHbH7DCkQjRwIBw&url=http://www.keyword-suggestions.com/Z29vZ2xlIGcgbG9nbw/&bvm=bv.136499718,d.bGg&psig=AFQjCNGDr7lY9A3OGAFnRkDARdKCytNKGA&ust=1477043653146155

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiUg8TvjunPAhWiPZoKHa1xBBYQjRwIBw&url=https://zh-yue.wikipedia.org/wiki/File:Apple-logo.png&bvm=bv.136499718,d.bGg&psig=AFQjCNFAhAWfIxcJHtyBf-xMKu0X4bvDcw&ust=1477043738957545


27

FROM INSURANCE 2.0 TO INSURANCE 3.0

1st Industrial Revolution

New Manufacturing processes and

the rise of the factory system

2nd Industrial Revolution

The technological revolution and

rapid industrialization

3rd Industrial Revolution

The Digital Revolution and the

Introduction of digital electronics

4th Industrial Revolution

The Smart Factory and

Cyber Physical Systems

End of 18th century

Beginning of 20th century

Mid of 20th century

21st century

Indu

str

yIn

su

ran

ce

Insurance 1.0

BI named perils

Insurance 3.0

Non-Damage BI

Insurance 2.0

BI All Risk


28

DATA DRIVEN CUSTOMER JOURNEY OF THE FUTURE

Risk Management Trends

Ris

k e

vo

lution

Cyber risks/Cross-Line of Business

Physical damages/Line of Business risks

Intangible Assets/No Line of Business

Insu

ran

ce in

du

str

y

Te

ch

in

du

str

y

Maturity level to assess and quantify the risk and price

Applicability/usage of Big Data analytics, predictiveanalytics, data mining, Artificial Intelligence (AI)


29


05SUMMARY


30

SUMMARY

Impact on the insurance value chain

• Insurance market will move towards firms that

are able to best harness AI to improve the

customer on-boarding and claim management

process

• Refining existing and developing new risk

services beyond traditional insurance is needed

• Change is happening. We can ignore it and

become obsolete or embrace it and remain

relevant

• We as AGCS want to engage with our brokers

and clients to benefit from and shape that

(r)evolution jointly


31

THANK YOU


32

THANK YOU

Backup


33

BUSINESS INTERRUPTION AND CYBER INCIDENTS

DOMINATE RISK LANDSCAPE

Top Business Risks

Evolving nature of

risk, and rise in cyber-

related incidents,

means business

interruption ranks as

top threat for

companies globally

Record-breaking losses

push natural

catastrophes and

climate change up

risk agenda

Potential “cyber

hurricane” events

and tougher data

protection rules shape

cyber risk environment

for year-ahead. Crisis

response crucial for

mitigation

Businesses worry about

emerging risks and

liabilities arising from

new technologies

Photos: Adobe


34

“CYBER HURRICANES”, REPUTATIONAL RISK AND

DATA RULES

Cyber Incidents

• Cyber ranks as the most underestimated

risk and the major long-term peril

• Recent cyber events demonstrate the

interconnectedness of risks and shared

reliance on common internet infrastructure and

service providers

• The potential for so-called “cyber hurricane”

events, will continue to grow in 2018

Which business risks are currently

most underestimated?

What are the main cause of economic

loss after a cyber incident?

Privacy risk is back in the spotlight following huge data

breaches in the US. New regulation The introduction of new

regulation will intensify scrutiny further, bringing the prospect

of more, and larger, fines for businesses who do not comply.

52%Reputational

loss

45%

Liability claims

after a data

breach

67%

Business

interruption,

impact on supply

chains

25%New

technologies

36%Business

interruption

54%Cyber incidents


35

DIGITAL AGENDA: SELECTED PROJECTS FROM AGCSONLINE PORTALS – EASY ACCESS TO AGCS’ SERVICES FOR CUSTOMERS AND BROKERS

AllianzGo

Launched in September 2017, AllianzGo is our new distribution

platform for SME business in North America. AllianzGo offers

Brokers online access for three products – Business Owners Policy

(package product for small business), Commercial Auto and

Workers’ Compensation, from quote to issue to payments to claims

– all online in just a few clicks. More

myAGCS.com

Our core platform for major clients and brokers continues to grow as

we take on board regular client feedback. Aside from global

insurance program data for Allianz Multinational clients, Allianz Risk

Consulting and Global Catastrophe Risk data, most recent

enhancements include the AXCO Knowledge Pool highlighting

insurance regulatory changes in key markets, a client dashboard, a

claims page and a page for Alternative Risk Transfer program

reporting. More

CT2Go: Clinical Trials

Clinical Trials require liability cover as a mandatory requirement,

often at short notice, and must be able to deliver policy

certificates locally as and when needed. AGCS’ new online portal

offers clients the ability to insure standalone trials online and

issue certificates immediately, thereby reducing uncertainty and

administration at a critical time in medical research programs.

Contact

MySmartGate

In collaboration with Insurtech mgm technology partners,

MySmartGate is an online self-service portal aimed at all

distribution partners serving small and medium-sized companies.

Currently being rolled out in selected markets, this easy-to-access

service offers Financial Lines products including Cyber to more

than 500 distribution partners, giving them the ability to quote, bind

and renew business online in a few clicks. More

Flock Cover: Drone Insurance

AGCS is partnering with InsurTech Flock to launch Europe’s first

ever real- time drone insurance product. Flock Cover is a mobile app

that aggregates and analyses big data relating to a drone flight,

assesses the risk on the spot, and enables the operator to purchase

‘pay-as-you-fly’ drone insurance at the touch of a button covering

both liability (up to £10Mn) and equipment cover. More

CUBE General Aviation

CUBE General Aviation is our new online platform for General

Aviation (GA) business in Germany. Launched in September 2017,

this platform provides policy quotation and placement services for

GA underwriters and connected Allianz agents, with a fully

automated process from quote to certificate. CUBE will enable us to

deliver faster and better services to our GA clients. Contact

http://www.agcs.allianz.com/global-offices/united-states/news-press-releases/allianz-go-/

http://www.agcs.allianz.com/services/international-insurance-programmes/myagcscom/

mailto:[email protected]

http://www.mysmartgate.com/

http://www.agcs.allianz.com/global-offices/united-kingdom/news-press-uk/agcs-flock-partnership/

mailto:[email protected]

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