InsurTech: Enabler or disruptor? Australia’s report into the InsurTech ecosystem

Andrew Parton, Partner EY

Brenton Charnley, Chairman Insurtech Australia

Where have we come from?

2015

2016

Mar. 2017

Sept. 2017

Oct. 2017

Jan. 2018

Now

InsurTech booms globally, early

days in Australia

Insurtech Sydney

& Melbourne

Meetups

ANZIIF Insurtech

Conference

Macquarie Bank

US Study Tour

Insurtech

Australia

launched

Global Insurtech

Alliance

launched

Over 30 members, 20 partners,

investments…we’re on our way

But, we’re just getting started…

We only represent 1% of the global insurtech community

23%

40%

17%

20%

Years of operation

0-1 years

2-3 years

3-5 years

6+ years

30%

20%

33%

17%

Stage of the company

Pre-launch

Post-launch (pre-revenue)

Post-launch (post-revenue)

Post-launch (post-profit)

Insurtech as an enabler

Insurtech is enabling the value propositions in Australia

New products to

deliver better customer value

propositions

Innovative marketing and

distribution

Pricing and underwriting

agility

Efficient insurance

administration

Smarter loss prevention and remediation

23%

23%

12%

18%

24%

New product to address customer value proposition

Innovative Marketing & distribution

Pricing and Underwriting Agility

Efficient Insurance Administration

Smater Loss prevention and remediation

Key themes: Collaboration needed

Greater levels of collaboration are needed between insurtech and incumbent insurance players1

Key themes: Playing to strengths

Insurtechs and incumbents need to leverage their strengths when partnering2

Key themes: Short runways, longer sales

Insurtechs are bootstrapping with short runwaysand longer sales cycles3

Key themes: Insurtech growing pains

Insurtechs need to overcome both their internal challenges in growing as well as the challenges of working with slower moving incumbents

4

Key themes: We’re building momentum

The Australian ecosystemis young, growing very fast and represents a great launch pad into other regions

528%

38%

10%

10%

7%7%

Capital raised to date

<$100k

$100k-$500k

$501k-$ 2m

$2.1m-$5m

$5.1m-$10m

>$10m

The value of InsurTech deals globally is significant and continues to rise…

…and Insurtechs want to work with insurers

1.Acceleration of innovation

2.New market entry opportunities

3.New digital customer propositions

4.Enablers of new business models, e.g., platforms & ecosystems)

5.To satisfy their curiosity, e.g., ‘I want to get an ecosystem!’

6.To hedge their bets, e.g., a ‘blind’ investment to participate in the new economy in some shape or form, i.e., ‘me too’ play

Incumbents often seeking

1.Access to customers

2.Help to scale into new markets

3.Sharing of Data

4.Provision Of capital / investment

5.Accelerator/Incubator program

6.Underwriting capacity

InsurTech startups often seeking

But where to start and what to do?

I need to understand

what digital innovations

to apply to my

organisation and

where..

The volume of Insurtech

vendors continues to grow,

making the selection process

of who to work with more

difficult..

The time and cost to test new

digital capabilities is high, and

the risks associated with being

‘wrong’ can be significant..

How do I balance freedom to

experiment with the need to

integrate and scale..

What digital innovations to apply and where?

The foundation for new businessmodels and products, plus easier data access for all parties

Digital insurers combine these

technologies acrossthe value chain

New competition and partnership opportunities for insurers, with a focus on

advanced risk mitigation techniques

Invaluable data streams for moreprecise underwriting, more responsive claims management and product innovation

Automation of core number crunching and transaction processing, focusing

humans on high-value tasks

New and deeper insights into customer needs, market trends and emerging risks based on advanced pattern recognition

Drones & SatellitesAutomation of many tasks previously handled by humans in claims and underwriting

— with efficiency gains up to 40%

Blockchain

Telematics

Artificial intelligence (AI)

Intelligent Automation/Robotics

Internet of things (IoT)

The combination of value chain, technologies, products and creates a vast universe of opportunity

Marketing

& Distribution

Immersive

Training – AR/VR

Claim

Management

Policy

Admin Underwriting

Corporate

Functions Product

AI: Investor

engagementRPA:

Compliance

reportsAI & RPA:

Automated

Financial ReportingRPA: Claims

settlement

RPA: Automated

Pay & Close

Drones for

Claim & damage

assessment

Digital

underwriting -

Blockchain

loT: Loss

Prevention

Automated Ins.

& Adjudication

Weather

Statellite: Claims

Fraud Detection

AI:

Customized

policy creation

RPA: Mobile

app based RPA

Blockchain:

Re-insurance

Customer

self-service

Big Data Usage

Model: Personal

Property

Blockchain:

Peer-to-Peer

Smart Policy

Telematic:

Automated

FNOL

Robo Advisor

Customer PolicyAI: Online

Policy

Acquisition

Satellite:

Customer

Acquisition

Artificial

Intelligence:

Cross-selling

AI: Predictive

Robo Sales

Social

Media

Acquisition

Unified digital

shop for

Insurance-

Blockchain

Interactive

service

experience -

AR/VR

Virtual Sales

assistant

AI: Risk ProfileDrones: Asset

Automated

Inspections

loT: Smart

device trigger

Telematics:

Fleet Insurance

Insurance valuechain

On what horizon should you focus your insurtech, digital and innovation efforts?

And what levels

of investment

and return should

you expect?

Type of growth

Disruptive

New customers

New to the world

TransformationalNew to you

New to you

Incremental

Existing

Existing

10%

70%

20%

20%

70%

Ideal level of

enterprise investment

10%Return on investment

Illustrative figuresProducts / business models

Cu

sto

me

rs / m

ark

ets

How do you scale – look at all of the digital enablers across your enterprise

Innovation

Agility

Workforce anddigital culture

Customer activation

Cybersecurity and risk

Experience design

Data and analytics

Digital architecture

Digital governance

Getting started - EY Insurance Hub process

Define the

problem/opportunityStep

1

An Insurance Hub Pod Approaches to charter

an Insurance Hub Pod :

1. Insurance carrier defines the

business problem to

solve/opportunity to explore

2. EY defines the Pod, and invites

a carrier(s) and Insurtech(s) to

participate

Our Insurance Hub process

An Insurance Hub Pod 1. Insurance company supplies

participating business and

technology resources

2. Selected InsurTech vendors

supply their technology and

necessary support resources;

facilitated by EY

3. EY provides the required EY

insurance business advisors

and technology developers

4. EY supplies the technical

development environment and

workspaceDefine the

problem/opportunityStep

1

Define & assemble the

team and technologyStep

2

Our Insurance Hub process

An Insurance Hub Pod A working prototype that can be

leveraged for a future production

release is jointly built by the

insurance company, the InsureTech

vendors and EY business and

technology resources.

Define the

problem/opportunityStep

1

Define & assemble the

team and technologyStep

2

Define plan, build

& test solutionStep

3

Our Insurance Hub output

An Insurance Hub Pod With code in hand, and

business/technology proposition

either proven or disproven, Insurer

can decide next steps.

Proposition & MobilizationFocused on prototype definition,

mobilization, backlog1-2

POC DevelopmentFocused on coding, UI

development3-4

Knowledge ExchangeFocused on POC vetting, user

feedback5-6

Implementation

Code pack delivered7-8Sprint

Sprint

Sprint

Sprint

From the EY Digital Insurance Innovation CenterUse case: Automated claims with advanced telematics

How do we obtain evidence of what really happens in a

motor accident and make the claims process seamless for

the customer?

Business problem• Integrate advanced telematics data with core processing

systems to communicate with customers via chatbot

• RPA extends from first notification of loss through to payment and claim settlement

Business opportunity

Secure paymentsystem

Advanced telematics

data

Advanced telematics data captured and downloaded from the cloud

Integrated chatbot platform

Automates claim workflow and interacts with claimant Processes payments on the basis of chatbot triggers

So, what’s next for Australian insurtech?

Andy & Brenton’s 5 point plan…

Businesses don’t do business with each other– people do1

Incumbent players to define how to innovate beyond the core2

Type of growth

Disruptive

New customers

New to the world

TransformationalNew to you

New to you

Incremental

Existing

Existing

Get involved - an ecosystem thrives when people participate and support each other3

Start small and focused, but begin with the end in mind4

Proposition & MobilizationFocused on prototype definition,

mobilization, backlog1-2

POC DevelopmentFocused on coding, UI

development3-4

Knowledge ExchangeFocused on POC vetting, user

feedback5-6

Implementation

Code pack delivered7-8Sprint

Sprint

Sprint

Sprint

Look across your operating model to become a truly digital enterprise5

Innovation

Agility

Workforce and

digital cultur

e

Customer activation Cyberse

curity andrisk

Experience design

Data and analytics Digit

al architecture

Digital governance

Thank you

Andrew Parton, Partner EY

Brenton Charnley, Chairman Insurtech Australia

Insurtech Ecosystem Report due 11th May please see us at Insurtech alley

to register for a copy.