Next Generation of the Previously Unthinkable

ORBiT Annual Members’ MeetingNovember 11, 2014

Patrick ViceInsurance-Canada.ca, Inc.

Overview

1. Three Generations of the Previously Unthinkable & Business/Technology Relationships

2. Emerging Technologies, Trends, and Insurance 2024

3. The Next Generation of the Previously Unthinkable

4. What Does All This Mean Today?

Warm up

• What does the future of insurance look like?

• What does the future of technology look like?

• What don’t we know?

Let’s Travel to the Present

1. Three Generations of the Previously Unthinkable & Business/Technology Relationships

2. Emerging Technologies, Trends, and Insurance 2024

3. The Next Generation of the Previously Unthinkable

4. What Does All This Mean Today?

5

The 3 Generations of the ‘Previously Unthinkable’*

1.The Mainframe Computer (1960s)

2.The Personal Computer (1980s)

3.The Commercial Internet (1990s)

*Thanks Willie

Business and the ‘Unthinkable’

• Functionality that could not be imagined without technology having been deployed

• Technology that could not be imagined without other other technology having been deployed

• This implies that technology precedes business

• After which business shapes and valuestechnology

The Internet

11:59PM31 Dec 99

Dot Bomb

The GR

MainFrames

PCs

Computing Access

External Linkage

Impact

Business/IT Relationship Cycle

Evolution of Business/IT Partnership

1995 2000 2005 2010

CRM is going to be great!

IT is stupid.Never ask for money again. Cut costs now.

Ah, we’rein an info business,

we need IT

We need newcapabilities

-- FAST

FAIT

H A

ND

EXPECTATIO

NS

Dot BombY2K

Great Reset

“Help us, Obi Wan Kenobi,You’re Our Only

Hope”

© 2009

The Internet

11:59PM31 Dec 99

Dot Bomb

The GR

MainFrames

PCs

Computing Access

External Linkage

Impact

Business/IT Relationship Cycle

Legacy replacmt,

CAMS

Yes, We CAMS!

• Cloud – Applications and Data held outside the enterprise, Pay as you go model

• Analytics – Increased use of data for descriptive, predictive, prescriptive activities

• Mobile

• Social

And add these to mainframe, pc, and internet applications (busy enough yet?)

The Current IT-Insurer Relationship: A Few Data Points*

• 78% - Changing customer demands are driving technology investment

• 28% Believe current technology strategy is fully aligned with strategic priority

• 17% are ‘Leader Companies’

*Source: StateStreet commissioned Economist survey of 321 insurer managers/execs

What makes a Leader Company*

*Source: StateStreet commissioned Economist survey of 321 insurer managers/execs

Innovation is rapid

Tech managersare proactive

Bus Managersexploit new tech

Tech Leaders 82% 70% 69%

All Respondents 53% 23% 22%

Let’s Take a ….

13

Let’s Continue

1. Three Generations of the Previously Unthinkable & Business/Technology Relationships

2. Emerging Technologies, Trends, and Insurance 2024

3. The Next Generation of the Previously Unthinkable

4. What Does All This Mean Today?

Remember Moore’s Law?

• Computer resources, disk space, Bandwidth, etc. tend to double every 18-24 months.

• SMA has described this as irrelevant, compared to the power of emerging technologies

• “because they are coming faster, and they are more formidable than ever before. “

Selected Emerging Technologies Impacting Insurance

Technology Hits Tipping Point (30%) Ubiquitous Use (70+%)

Internet of Things 2017 2021

Wearable Devices 2016 2021

Drones, Ariel Imaging 2017 2021

Artificial Intelligence 2017 2024

Driverless Vehicles 2018 2024

Semantic Technologies 2019 2024

3-D Printing 2016 2020

All of these have traditional insurance practices in their sites (busier still?)

Internet of Things

© 2014 Celent a division of Oliver Wyman

How Will Insurance Look in 2024*

• Mature markets commoditize• There will be lose of risk premium in auto and other

lines• Growth comes from new segments, markets &

products• Prospective, not retrospective, risk management

– Variable risk profiles– Just in time coverage

• Renewed focus on independent distribution to differentiate and gain mindshare of customer

• Greater collaboration

* Various presentations at the ICEF2014

Crop insurance - Google-styleThe Climate Corporation

• Crop insurance company, founded by ex-Googlers

• Crunches mass data from climate models, weather measurements and billions of soil observations

• 50 tb of live data are in its systems

• Policies for specific plantings

• Paid on specific events – not on impact

• Acquired recently by Monsanto for $930 MM

Thanks to Donald Light, Celent

The Customer … *

• …is not Your Customer alone

• Best-in-class experiences had in one industry, are now expected in all industries, for every definition of a “customer”

• Gap

– 80% of CEOs think they deliver a superior customer experience

– 8% of Customers agree (ibid.)

* Peter Pleckaitis, IBM at the ICEF2014

How will distribution look like in 2024*

• Social Distribution Networks

– End to end process for all parties

– Relationship focused

– Premium is on communications

• Producer Big Data

– Deliver specific market demographics

• Outcome based compensation

* Various presentations at the ICEF2014

Summary

• We are at a place where the 3rd Generation of the unthinkable is now routine

• The Internet allowed us to get more information from new sources, but

• IT/Business relationships are strained trying to cope with CAMS and legacy systems

• Knowledge workers are at a limit of being able to digest the information and maintain meaningful contact through all the networking options available

Time for Another ….

23

Let’s Continue

1. Three Generations of the Previously Unthinkable & Business/Technology Relationships

2. Emerging Technologies, Trends, and Insurance 2024

3. The Next Generation of the Previously Unthinkable

4. What Does All This Mean Today?

What will drive the 4th Gen?

• Big Data

• Big Networks

• Analytics

• New Business Models

• Inability of knowledge workers to exploit data, analytics, and networking in an actionable time frame

Assume: Innovation is needed to add virtual knowledge worker capacity

• Cognitive Computing may be the answer

• What is Cognitive Computing?

– In dynamic, information-rich, and shifting situations, data tends to change frequently, and it is often conflicting. Cognitive computing system offers a synthesis not just of information sources but of influences, contexts, and insights. Systems weigh conflicting evidence and suggest an answer that is “best” rather than “right”.

Example: Watson

• Jeopardy winner 2011

• In production with a number of large- scale medical research/treatment pilots

• Entering P&C Insurance

Let’s Continue

1. Three Generations of the Previously Unthinkable & Business/Technology Relationships

2. Emerging Technologies, Trends, and Insurance 2024

3. The Next Generation of the Previously Unthinkable

4. What Does All This Mean Today?

Brokers today ….

• Know your customers and communicate –using their preferred methods

• Become 24x7

• Run an efficient operation

• And seek efficiencies from their partners – this includes connectivity

• What else can you do?

What else?

• Learn more about CAMS – especially– Mobile– Analytics

• Determine segments of your book – Determine growth potential– Determine how you could package this

• Determine your markets’ segments• Discuss digital and customer strategies with markets• Involve staff in all of the above – look for candidates to

participate projects

Thanks, and Now a …

31

… to refresh

Next Generation of the Previously Unthinkable

ORBiT Annual Members MeetingNovember 11, 2014

Patrick ViceInsurance-Canada.ca, Inc.