the future is digital australia and new zealand ......1. “digital australia: state of the...

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Australia and New Zealand Insurers Go Beyond the Usual

Sponsored by

T H E F U T U R E I S D I G I T A L

IDC InfoBriefNOVEMBER 2017

Empowered Customers

Omni-channel User Experience

Platform-driven Ecosystem

Anytime, Anywhere Access

Usage-based Insurance

IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual2 Sponsored by

Empowered customers with

rising digital expectationsDigital is now table stakes for anyone to compete for

increasingly tech savvy customers.

40%

of customers are expected to walk away from a business that fails to deliver a good digital

experience1

Regulatory guidelines becoming pro-digital

From allowing open data, to new standards for digital services, to fostering higher trust amongst buyers. The Australian Securities

and Investments Commission (ASIC)

leads among the global regulators.2

to fast-track digitalisation and use of new

technologies such as robo-advisory.

ASIC sets the pace

The rise of startups

The value chain of insurance is

disaggregating, giving rise to opportunities for new third-party companies to take on activities such as

product development, pricing, customer insights, selling,

claims management, and so forth.

40%

of Australian CEOs concerned about new,

more agile competitors3. 5-fold increase in the number of fintechs in

Australia4: 100+ in 2014 to 500+ in 2017.

Integrating insurance into

consumers’ lifestyle

Aside from the traditional “loss

prevention” value proposition, insurers are introducing new

products to meet consumers’ digital

lifestyle – helping them to enjoy life (work, amusement, and relationships) as

they please.

Upsurge of new insurance

offerings

From 2017–2020, 5-Year CAGR:

5% Travel insurance (Australia) 5

5% Health insurance (Australia) 6

10% Mobile insurance (worldwide) 7

Toward a consumption-based model

The nature of insurance is changing. The

old-school, cookie-cutter approach of

selling occasional and transactional products are giving way to new

distribution models and self-service platforms as customers want to buy,

and not be sold to.

Sales enabled by IoT

By 2019, a higher percentage of insurance

products sold in APeJ will be usage-based enabled by the Internet of Things

(IoT). 5-year CAGR8: 25% Vehicle insurance;

5% Home insurance

5 K E Y D R I V E R S T O W A R D A D I G I T A L F U T U R E

The Fast Changing Insurance Landscape

1. “Digital Australia: State of the nation”, 2017 Edition, EY Sweeney report2. IDC Research, ASIC website3. IDC Research, C-Suite Barometer Survey 2017, Australia - FSI4. IDC research and Australian Fintech Landscape, KPMG, 2017

5. Travel insurance: Investor Presentation, Zurich Insurance Group, Dec 20166. Health Insurance: IDC research & estimates7. Mobile Insurance: SNS Research estimates , Sep 20178. IDC FutureScape: Worldwide Financial Services 2017 Predictions — APEJ Implications

Sources:

IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual 3Sponsored by

Confronting a Lagging Legacy5 T R A I T S T O T H R I V E I N T H E D I G I T A L F U T U R E

Sources: 1 “Digital Australia: State of the Nation”, EY Report; 2 “World Insurance Report 2016”, Capgemini report; 3 IDC Research, IDC C-Suite Barometer 2017, EY APAC CRO Survey 2016; 4 IDC Research & estimations, OECD Insurance Statistics 2015-16; 5 IDC Worldwide Semiannual Public Cloud Services Spending Guide, 2016H2; 6 IDC Research & estimations, published case studies

Meeting customers’ digital expectationsAustralian customers rank the insurance sector as fifth lowest in digital experience against 24 other sectors.1 Greater than 50% of Australian customers are willing to use digital channels (phone, mobile apps, Internet).2

So how can Australian and New Zealand insurers respond to the fast-changing demands of the industry? IDC identifies five key digital transformation (DX) traits needed to overcome long-standing challenges

TRAITS OF TRANSFORMED ENTERPRISES

Proactively manage risks and achieve compliance 15-20% of IT budget is spent on governance, risk and compliance (GRC) requirements by APAC insurance industry3; majority of CROs still continue to spend significant time and resources on just meeting regulatory requirements.

Staying nimble and efficient Current core platforms are holding insurers back. Operating expense ratio for Australian insurance industry is estimated to be higher than similar developed countries like US, UK (14% against 11% in US and 7% in UK).4 Modernisation can save up to 30-40% of the IT operational costs.

Gearing for a consumption-based model Insurers’ current time to market is too slow. It takes 12 -18 months to develop a new product, whereas the global average is between 6-12 months6. Legacy systems impede product development.

Meeting consumers’ digital lifestyle needs Reduced ability to enable lifestyle facilitation, including new types of personalised insurance experiences and products, as IT still maintains significant control and is not agile enough to make necessary changes. Regional insurers are already showing signs of readiness to partner with startup companies for better personalisation of insurance products. Spending on public-cloud for SaaS/IaaS/PaaS will exceed CAGR of 25% by 20215.

Greater agility to respond to new rules, standards, and guidelines set by the regulator – and repurposing this capability for business.

Embrace as-a-service models via the cloud.

Adopt open platforms-of-platforms, allowing multiple participants to connect to it, interact with each other and exchange value.

Gain faster speed to market with product development platforms.

Have full omni-channel capabilities that make data and capability available through multiple devices and applications.


Digital Transformation Leaders in the MakingL E A D I N G L I F E I N S U R A N C E C O M P A N I E S R E T H I N K T H E I R C U S T O M E R S ’ N E E D S

T A I P E I , S I N G A P O R E

Redefined the customer journey with Allianz Discover. The interactive, tablet-based digital sales tool enables customers to understand their lifestyle needs at a glance, plan for their financial and life protection goals, and discuss customised solutions with their advisers.

Allianz

S I N G A P O R E

LumenLabs, MetLife’s innovation unit, has partnered startups to explore the use of technologies such as robotic process automation (RPA), cognitive bots, and cutting-edge analytics. The goal is to drastically improve speed to market and achieve regulatory reporting compliance for high-volume processes.

MetLife

S I N G A P O R E

AXA Pay-As-You-Grab is a usage-based motor insurance policy for private hire car drivers, whose premiums start at a very low base (70% of traditional commercial insurance) and increase on the basis of miles driven, measured via the Grab app.

AXA

A U S T R A L I A

AIA Vitality is a wellness programme that encourages customers to make healthier choices by adding up the benefits. The subscription to the program can be integrated with other AIA Australian insurance products. Customers enjoy benefits such as annual cashback offers, discounts on gym memberships and health screening packages, as well as free additional coverage or premium discounts on insurance products as one becomes healthier.

AIA

A U S T R A L I A

QBE deployed a new platform as part of their digital transformation journey. Among the key functionalities: core processing, data and analytics, and digital engagement products aimed at improving customer service as well as gaining greater agility in product design and pricing.

QBE


Digital transformation of insurance organisations requires a platform that is able to support them with the right systems and capabilities. IDC Financial Insights identifies 15 capabilities to help Australian and New Zealand insurers deliver a compelling digital insurance model.

PLATFORM OF PLATFORMS

Digital Insurance Platform of the FutureA L I G N I N G T O S E R V E T H E E M P O W E R E D C U S T O M E R

OMNI-CHANNEL

Increases both the number and type of customer touchpoints

Makes data, applications and functionalities consistently available across all customer touchpoints and channels

Has the capabilities to take on new channel types, and interaction types – voice, IoT, robo-advisory

Supports API-enabled services

1

2

3

4

AS-A-SERVICE Allows access to current technology capabilities without high capital investments

Supports pay-per-use models of consumption

Provides scalability upwards and outwards

Provides 24/7 operations and managed services support

5

6

7

8

FLEXIBILITY, AGILITY AND AUDITABILITY

Delivers speed and agility in business functions while insurers focus on core competencies. Unlike monolithic legacy systems, platform solutions help develop ecosystems for systems of engagement (particularly channel systems) and systems of record

9

PRODUCT DEVELOPMENT CAPABILITY

Enables risk pricing to shift from mass-segmentation to tailored solutions for smaller customer segments (even a customer segment of one)

Supports industrialised product rules and configuration management externalised from core engine

Provides rapid product development and testing frameworks

Leverages new data sources and use of advanced analytics for better product development

10

11

12

13

Provides a plug-and-play business model that allows multiple participants (producers and consumers) to connect and interact to create and exchange value

Supports API-enabled business processes that allow trusted third-party partners (fintechs, business partners, IT service providers) to participate in key parts of the insurance service lifecycle (e.g., policy administration, claims, and billing).

14

15


Digital Insurance as-a-ServiceB E N E F I T S O F D X C T E C H N O L O G Y ’ S S T R A T E G Y

Fundamental to DXC Technology’s strategy for insurance is commitment to lead the industry’s digital transformation. Insurers are in a race against time, as their competitors and new market entrants are raising the bar quickly. The breadth of DXC’s capabilities, now combined with DIaaS, uniquely position DXC technology to curate and implement an insurance ecosystem which will satisfy the digitally savvy consumer.”

Michael NearyGeneral Manager

Insurance IndustryDXC Technology

Australia and New Zealand

Increase reach to

customers

DXC’s Omni-channel Digital

Consumer Engagement

Platform enables client

interactions, any way, at any time.

Reduce IT

spend

By at least 11%, based on IDC

Financial Insights benchmarks of financial institutions

moving from CAPEX to OPEX

models.

Gain agility

Ability to be implemented in

4-6 months.

Launch products quickly

Shorten product development

from months to weeks.

Gain access to new revenue

sources

By adopting lifestyle

integration via open API-

enabled services.

Future-proof systems

An evergreen IT landscape keeps

applications, infrastructure,

operations always up to

date.

Support regional

compliance

Meet regulatory requirements shared across

clients.

Data analytics for actionable

insights

To better understand

risk and create personalised

customer offerings.

D X C D I G I T A L I N S U R A N C E

a s - a - S E R V I C E ( D I a a S )

DIGITAL PRODUCTS

Product development capability

Speed to market

Easy to understand

Configurable rules engine

CUSTOMER EXPECTATIONS

Omni-channel

Informative

Intuitive

Conversational

REGULATORY COMPLIANCE

Flexibility, agility and auditability

Compliance change costs shared

Reducing legacy risk

Real-time reporting

PLATFORM OF PLATFORMSLinking capabilities

across platforms

API-enabled interactions, loosely coupled

Sharing economy

AS-A-SERVICEConsumption-based pricing

Fully integrated components

Localised templates

Fully managed service


A N Y C H A N N E L A N Y W H E R E , A N Y T I M E , A N Y O N EMap out your strategy and go-to-market in such a way that your clients can access your insurance services 24 hours a day via their preferred method.

S TAY C O M P L I A N T A N D P R E V E N T S E C U R I T Y AT TA C K SThese include security for new channel types, analytics for claims and policies, identity and access management, and Web application protection.

M A N A G I N G Y O U R P R O D U C T L I F E C Y C L ELook for API management tools that enable you to capitalise on the open API market.

A S - A - S E R V I C EWork with technology partners who can provide end-to-end or modular policy administration as well as a pay-per-use platform that offers digital platform integration that your clients are looking for.

Self-Discovery QuestionsScaling according to the needs of the business • What is your time to market to launch a new insurance product? • Do you know your costs across your company to launch a new insurance product? • What is your strategy for launching new products faster and more cost-effectively? • Are you willing to trial new products and innovative business ideas?

Regulatory and compliance • Are the new governance and compliance requirements putting a strain on resources and taking time away from projects that offer greater innovation potential to the business? • What portion of your budget is used to address regulatory and compliance requirements?

Becoming open to open insurance • How are you preparing for more open integration with partners, start-ups, other data sources? • How much visibility should you allow and yet maintain high security without impacting innovation? • How do you reduce the cost of insurance products and services in the process? • How do you stay compliant and maintain your speed-to-market and competitive advantage as open insurance services evolve?

Essential Guidance

Digital Insurance as-a-Service promises to fast-track the transformation of insurers to be more agile, market-responsive, and open to a broader set of services that expands the value proposition of insurance. DXC Technology brings this vision to reality with its industry expertise and services capabilities.”

Michael AranetaAssociate Vice President

IDC Financial Insights


Digital Insurance Platform The Secure Foundation for Today’s Rapidly Evolving Market

P E R S O N A E X P E R I E N C E

Policyholder | Broker | Advisor | Underwriter | CSR | Adjuster | Digital Marketer | Ecosystem

Cloud Network Service Management Security Operations Audit DR/BC

Insurance Components • Policy & Product• Billing• Claims • Reinsurance

Data & Analytics• Cognitive/ML• Analytics & Reporting• Analytics Platform• Data Platform

Ecosystem Providers• Platform Services• Technology Services• Business Services

D I G I T A L I N S U R A N C E F R A M E W O R K

UI/UX Security Microservices API Management Integration Mobility BPM

Product > Marketing > Distribution > Servicing > Billing > Claims

A C C E L E R A T E D I M P L E M E N T A T I O N

Typical customer implementation for digital insurance At least 2.5 years

Typical core insurance

DXC R&D investments since 2016

2016 Today

• Regional platform development• Integration to industry applications• Development of product templates• CX/UX journey templates• API enablement• Insurtech ecosystem

Your new digital insurance platform

4-6 months

Accelerated Implementation

for Digital Insurance

Launch

Adopt these out of the box to:• Configure products• Confirm CX/UX journeys• Connect APIs• Validate processes• Other integrations

(payment gateways)• Configure reports• Testing

the future is digital australia and new zealand ......1. “digital australia: state of the...

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