Finity Pricing and Analytics Seminar 2016 Steven Walker & Ian Chisholm

October 2016

“InsurTech“ What you need to know

Topics for today

1 Technologies shaping business today

2 Fintech in Australia

3 What is “InsurTech”

4 Implications for Pricing & Analytics

5 How should we respond

Technologies shaping business today

3

Blockchain / Bitcoin

Network effects

Cloud

FinTech in Australia

Fintech puts customers first, instead of the banking business model

Technology is enabling new players (PayPal, Google and Apple) and start-ups to disrupt the traditional banking business model

Large Australian banks are hiring digital skills to work in innovation ‘hubs’ and/or partner with entrepreneurs/startups, to produce new products and services

It’s a little too early to tell the actual impact on Australia’s Banking industry

CBA collaborated with On Deck Capital to provide business loans to its retail Small-Medium Enterprises with revenue <$1m. Streamlined application process, loan size of $10k-$150k, 6-24 month terms, decision in 1+ days,

funding in 1+days, competitive rates and fees

On Deck

https://www.ondeck.com.au/au-landing/

$4b in loans globally since

OnDeck opened in 2008; a

serious competitor to

large banks

Westpac have partnered with entrepreneurs to set up ‘Reinventure’, investing in

new companies at the formation stage

SocietyOne was one of their first investments

http://reinventure.com.au/

SocietyOne

https://www.societyone.com.au/

$5m

Stockspot The first robo adviser in Australia, which is computer generated financial assistance, or automated investing. A customer completes questions around

their financial needs, and Stockspot provides product suggestions https://www.stockspot.com.au/

What is InsurTech?

First in Financial Services “FinTech”, now in insurance “InsurTech” - insurers are questioning, and in some cases changing, the direction and nature of insurance

technology investment. Over $4.7B invested in last 5 yrs

Source: CN Insights, InsuranceTech Conference, Oct 2016

© Copyright

Friendsurance “Make insurance easier and more affordable”

Based on a “shareconomy” approach, policy owners with the same

insurance type form small groups. A part of their premiums is paid into a

cashback pool. If no claims are submitted, the members of the

group get some of their money back at the end of the year. In case of

claims, the cashback decreases for everyone. Small claims are settled

with the money in the pool.

Source: www.friendsurance.com . April 2016.

Trōv “Save your stuff on trōv because it

pays to back up your stuff”

Protect just the things you want - exactly when you want - entirely from your phone.

Trōv is a new technology platform created by

an InsurTech start-up, designed to give consumers insurance for their individual

possessions whenever it's needed. Digitising the process from identification of what is to

be insured, through premium quote to payment and finalisation of the claim.

Source: www.trov.com. April 2016.

FendaMenda “Have a little crash without involving your insurance” FendaMenda provides help to customers to recover from small incidents that are less than their excess – record incident details, obtain repairer quotes and

negotiate settlements

Source: http://fendamenda.com/

Lemonade “Insurance that doesn’t suck” Lemonade, yet to commence, is advertising as the world’s first peer to peer

insurer to go back to basics for insurance and use behavioural economics within its business model / data driven innovation

Source: http://www.lemonade.com/.

Pricing & Analytics – Risk Management

Pricing & Analytics – External Data

How should we respond?

Depending on their size, scale and risk profile insurers will respond differently. However, at minimum all insurers should maintain a “watching brief” as part of a balanced approach to technology investment.

Re-examine business models to test its vulnerability to disruption

Improve Board and C-suite technology related strategy discussions

Adjust your culture to allow innovation, ‘fast fail’ and taking calculated risks

Keep your eyes firmly on your customers and their changing needs

Consider investing in InsurTechs if your capital and risk appetite allow it

Thank you for your attention

Steven Walker Director Consulting Level 15, St Martins Tower Sydney NSW 2000 Australia M 0412 412 712 T 61 2 8220 8096 Steven.walker@frazerwalker.com www.frazerwalker.com

Ian Chisholm Director Consulting Level 15, St Martins Tower Sydney NSW 2000 Australia M 0401 316 004 T 61 2 8220 8096 Ian.chisholm@frazerwalker.com www.frazerwalker.com