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Life insurance 2022 – A bold vision
Life2017
21/ 22 June 2017
Heloise Rossouw, Colin Forrest, Gary Williams
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An uncertain future
2
Government
Fractional Ownership
Customer ExpectationsShareholder Expectations
Regulatory Pressures
Changes in the nature of traditional risks
Digital markets
Value Chain Compression
Super abundant capital
Virtual worldAI
Ageing population
Finite resources Growing population
Individualism
Diffusion of power
Migration
Rise of generation X and Y
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Insurance 2022: three key global trends affecting the insurance industry in the next 5 years
3
1Transformation of
risk
Acceleration in
#insurtech and
technology
Demographic risk
2 3
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#1 Demographic risk
4
22030
4 to 22060
1.5m2020
40%75%
2025
60%2020
2020
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#2 Transformation of Risk
5
P2P
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WEF Global Risk report 2017
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#3 Acceleration in #insurtech and technology
6
Artificial Intelligence
Blockchain
Internet of Things
Next Gen Big Data & Analytics
The Sharing Economy
Social media and network economics
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Source: Kurzweil Accelerating Intelligence - http://www.kurzweilai.net/the-law-of-accelerating-returns
Copyright (C) Raymond Kurzweil 2001
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Which road will we choose?
7
Who are our
competitors?
Who are our
customers?
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Are we bold enough?
8
We’ve long believed that over time
companies tend to get comfortable doing
the same thing; just making incremental
changes. But in our industry, where
revolutionary ideas drive the next big
growth areas, you need to be a bit
uncomfortable to stay relevant. Larry Page CEO, Google
“
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21/22 June 2017
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Heloise Rossouw
Customer and product
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If I’d asked people
what they wanted
they’d have said
faster horses
Henry Ford
Do we know what our customers’ needs and wants are?
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What are our customers’ hopes and dreams?
11
Do they dream about…
…Saving £100 each month?
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Do they dream about…
What are our customers’ hopes and dreams?
…the perfect holiday?
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Do they dream about…
What are our customers’ hopes and dreams?
…providing their child
with an education?
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Biggest motivations for saving money
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Holiday Retirement Short-term
emergencies
Home
improvements
55% 47% 41% 39%
50% often worry about their financial future. Just a minority (40%)
expect the long-term will look after itself
40% believe saving is a high priority for them. Despite saving being
a priority, half (50%) still like to spend their money on the things
they want. Just 10% see saving as less of a priority
Source: The savings psyche of the UK - A new approach to pensions and savings for 21st-century Britain
Willis Towers Watson and Nottingham University Business School
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People prefer flexibility
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To what extent would you want your pension savings to be flexible?
No flexibility - a pension contribution is exactly what I need
to save for retirement23%
Some flexibility - I want to have the choice of using my pension fund for
other means, other than my retirement 48%
Full flexibility - I would prefer to be able to access my
pension fund when I want 17%
Don’t know 12%
‘Flexers’
‘Traditionalists’
Gen Y Gen XBaby
Boomers
‘Flexers’ 73% 62% 56%
Source: The savings psyche of the UK - A new approach to pensions and savings for 21st-century Britain
Willis Towers Watson and Nottingham University Business School
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Choice overload
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12%
13%
10%
31%
34%
35%
Regular savings accounts
Pension / saving forretirement
Cash ISAs
Too much choice
Too little choice
Source: The savings psyche of the UK - A new approach to pensions and savings for 21st-century Britain
Willis Towers Watson and Nottingham University Business School
Do you think you have too much or too little choice when it comes to saving money
through the following?
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The three key areas of decision-making
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% Critically important / important
33%
56%
58%
66%
69%
70%
74%
79%
31%
52%
58%
60%
64%
67%
75%
76%
Non-financial incentive (e.g. free gift,railcard, etc)
A wide range of savings / investmentproducts
Financial incentive (e.g. cash boost)
Customer service / experience
Knowledge of financial provider
Reputation of financial provider
Guaranteed return on my savings
Competitive interest rate / return
Short-term
Primary
Financial return
Secondary
Financial support /
service
Tertiary
Financial incentive
Source: The savings psyche of the UK - A new approach to pensions and savings for 21st-century Britain
Willis Towers Watson and Nottingham University Business School
To what extent are the following factors important to you when making a short-term and long-term savings
decision?
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Protection
Risk
management
Influencing
Savings
vehicle
FINANCIAL
RISK PARTNER
What do our customers need help with?
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How will this change over time?
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What could the products of the future look like?
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Product innovationTargeting and segmentation as the population changes
21
Diabetics in 2015:
4 million in United Kingdom
(6.2% of population)
0.8m in Czech Republic
(7.5% of population)
Diabetes prevalence continues to
increase – 10% of UK population
expected to be diabetic by 2034
Health profile of diabetics is completely
different from average population
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Product innovationInfluencing and rewarding positive behaviour
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Product innovation
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Helping people save
“WORKS OUT WHAT YOU
CAN AFFORD TO SAVE”
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Product innovation
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Helping people save
“INVEST YOUR SPARE
CHANGE”
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Product innovation
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Helping people save
“START INVESTING WITHIN 10 MINUTES”
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Product innovationChanging perceptions about insurance
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“LIFE
INSURANCE
REDESIGNED”
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Product innovationChanging perceptions about insurance
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“DELIVERING ON OUR CLAIMS
PROMISE IS THE BEST WAY TO DRIVE
TRUST IN BIMA AND DEMONSTRATE
THE VALUE OF INSURANCE”
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Product innovationChanging perceptions about insurance
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“WE TREAT THE
PREMIUMS AS IF
IT’S YOUR MONEY”
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Product innovationChanging perceptions about insurance
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“WE TREAT THE
PREMIUMS AS IF
IT’S YOUR MONEY”
“GETTING
LIFE
INSURANCE
SHOULD BE
PAINLESS”
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Product innovationChanging perceptions about insurance
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“THINKING LIKE A
CUSTOMER ”
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Product innovation
31
Savings product’s linked to customers’ goals
Source: https://www.slideshare.net/VishalNaidoo1/2inone-savings-slides-july2014
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Product innovation
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“Your customers don't care about you.
They don't care about your product or
service. They care about themselves,
their dreams, their goals. Now, they will
care much more if you help them reach
their goals, and to do that, you must
understand their goals, as well as their
needs and deepest desires.”
Steve Jobs 1955 - 2011
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21/22 June 2017
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Colin Forrest
Digital data disruption
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Recognize these logos? Here are 1/3 of #insurtech players
35
P2P Healthcare UBI/Auto
Sharing Economy
Spot Insurance
Product insurance
Backend
Marketplace & online
consumer platforms
Data, Software & Analytics
Accelerators
Reinsurance
IoT
Life Insurance
Blockchain
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Willis Towers Watson 2017 Digitalisation Report
36
12
18
22
30
40
0 5 10 15 20 25 30 35 40 45
Blockchain
P2P risk sharing
Internet of Things, wearables
Artificial Intelligence
Big Data/Real-time Analytics
Which of the following (digital) technologies do you expect to have the biggest impact on the
insurance sector over the next two years and the next five years?
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Barriers/excuses
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Data
Barriers/excuses
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Barriers/excuses
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Barriers/excuses
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Change is here…
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Change is here…
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Change is here…
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Goal is to have the happiest members paying the
lowest costs for the healthiest outcomes
145K customers in 2016 with plan to reach 1Mn
customers
Making data-driven decisions based on large data
sets aggregated across providers and care data
“Make health insurance suck less”
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Change is here…
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What if?
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21/22 June 2017
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Gary Williams
Competitive landscape
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The Competitive Landscape has many positives…
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Customer needs are clear
and growing, and loyalty
(or inertia!) is high
Insurers possess
many difficult to
replicate building
blocks
Relatively
benign
competitive
forces...
so far
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Sources of historic differentiation under
attack
So why are we not all feeling smug…
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Inert customers (that we don’t really
know?)
Legacy distractions
Threat that external forces are heating up
?
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Regulation
Regulation
makes entry
more difficult
Data &
analytics
Historic claims
data is private and
owned by
incumbents
Customer
vs. Risk
Analytics
Additional (external)
data sources proving
as important to
determine risk
Many start-ups have
started working
directly with regulator
to overcome
limitations
AIs/Deep machine learning
players entering the space.
System sustainability?
Cost of entry, capital
and balance sheet
requirement
are high
Exponential trend in
VC entering the
space
Cost of
Entry
Understanding
consumer behavior
is not the same as
understanding risk
Why haven’t we seen more new entrants and disruption (yet)?
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So what should we be doing?
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Act NOW to embrace the changes required to
remain fit to compete in 20223
Clarity around the big questions…1....but don't plant your feet - stay agile2
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What do you want to be?
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Will competitive forces drive to you to
change your footprint?
• To ‘advise’ or not?
• Asset Management?
• Wider Lifestyle partner?
• Increase customer focus?
Retailer Wholesaler ManufacturerOr Or
Or a combination of all three
Product Provider Service ProviderOr
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How do you want to differentiate yourself?
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“[Market leaders] … become champions in one of these disciplines while meeting industry standards in
the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.
X
Product
Leadership
Operational
ExcellenceCustomer
Intimacy
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How do you want to differentiate yourself?
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“[Market leaders] … become champions in one of these disciplines while meeting industry standards in
the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.
XOperational
ExcellenceCustomer
Intimacy
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How do you want to differentiate yourself?
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“[Market leaders] … become champions in one of these disciplines while meeting industry standards in
the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.
XCustomer
Intimacy
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How do you want to differentiate yourself?
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“[Market leaders] … become champions in one of these disciplines while meeting industry standards in
the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.
Customer
Intimacy
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How do you want to differentiate yourself?
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“[Market leaders] … become champions in one of these disciplines while meeting industry standards in
the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.
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Which markets offer growing profit pools and/or Blue Oceans
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Aging Populations e.g. Long Term Care?
The untapped masses e.g. Micro Insurance
Provision moving from government to corporate e.g. Group coverages and savings
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New Competitive Innovation : Breaking through complexityMoneyfarm
“START INVESTING WITHIN 10 MINUTES”
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New Competitive innovation: Overcoming inertiaChip
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“WORKS OUT
WHAT YOU CAN
AFFORD TO SAVE”
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New Competitive innovation : Overcoming inertiaMoneybox
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“INVEST YOUR
SPARE CHANGE”
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New Competitive innovation : Breaking through complexityVanguard
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Hybrid customer service incorporating
robo-advisers and humans
51% of customers are 65+
35% are 50-65
14% are under 50%
Minimum monthly investment: £100
Minimum lump sum: £500
Account fee: 0.15% p.a, capped at
£375
Additional fee per fund, which would
currently average 0.14% p.a.
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Be agile and adapt quickly
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Ahead of market disruption we need to build the capabilities and
market positions that provide strategic degrees of freedom more
important than ever….
It is not the strongest of the species
that survives, nor the most intelligent, but
the one most responsive to change.
Charles Darwin, 1809
“
“
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Act now…
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We always overestimate the
change that will occur in the
next two years and
underestimate the change
that will occur in the
next ten. Don't let
yourself be lulled
into inaction.
““
Bill Gates
Many of the capabilities likely to be required
tomorrow will take time to build.
Need to act now to start the journey and many are
no regret moves, for example:
Advanced Analytics
Organisational Efficiency
Sorting or Selling the Legacy
Others less so, for example:
Need for retail brand?
Own more of the customer experience?
Levels of uncertainty require a more dynamic
approach to monitoring competitor/market
changes