www.dlapiper.com 0 2016 Insurance Symposium Wednesday, 24 February 2016

Wednesday, 24 February 2016

2016 INSURANCE SYMPOSIUM

DLA Piper, No. 1 Martin Place, Sydney, Australia

Now and when: Digital disruption, social media and the insurance industry 1 Dr Amy Gibbs, Digital Communications

and Content Strategy Manager, ANZIIF

I've come up with a set of rules that describe our reactions to

technologies:

1. Anything that is in the world when you’re born is normal and

ordinary and is just a natural part of the way the world works.

2. Anything that's invented between when you’re fifteen and thirty-five

is new and exciting and revolutionary and you can probably get a

career in it.

3.Anything invented after you're thirty-five is against the natural

order of things.

Douglas Adams, The Salmon of Doubt

“

”

Techno-panic: a moral panic that centres around societal fears

about a specific contemporary technology

Would your business survive without:

Writing things down?

Telephones?

Computers?

Email?

Social media fits within this phenomenon

Focus is on the risk of being ON social media

This ignores the risk of NOT being on social media

Social media is a trust signal of progressiveness

E&Y: Insurers are lagging behind the digital curve “Failure to embrace digital exposes the industry to considerable risk”

PwC predicts that by 2020: Balance of trust will shift from advisors to online communities

Social networks will become group insurance channels

Social networks will become pooling mechanisms

Insurers will go from being product manufacturers to administrative

service providers

McKinsey Institute “Some tech and tech-enabled firms destroy more value for incumbents

than they create for themselves, and many gains are competed away

in the form of consumer surplus.”

Gartner & ACORD:

Most P&C and life insurers “underestimate the disruption coming

from future industry conditions and are not prepared to respond to

new threats.”

“Insurers overestimate the reliance that consumers have on agents,

brokers and traditional channels, not realising the potential threat that

new competitors represent and the power of these consumer-friendly

and recognised brands.”

Insurers continue to focus locally

53% of insurers believe the most significant threat to their businesses

are the top five competitors in their local market

Goal of bridging the trust gap by making insurance “social, fair and

reasonable again”

Combines social networking with established insurers

Select large claims coverage from comparison list

Connect to people and pool money for small claims

More connections = higher claims support

Up to 50% of premiums back each year

Better risk pools, reduced fraud, 40% fewer damage events, less

sales, reduced claims handling costs

Guiding Gen Y using technology and engagement

Everyday goal to make insurance simple, intuitive & human

Want to be a health services provider, not only an insurer

24/7 doctors calls, free doctors visits, free generic prescription

drugs, ‘find a doctor’ interactive map

Doesn’t pander to Gen Y, talks to them in their spaces

People grouping together online to cater for niche

insurance needs

Build their own group insurance with better coverage, dedicated

policies and less expense

For example:

Travel insurance for people with arthritis

Abyssinian cat insurance

Over 50s iPad insurance

Nintendo insurance

Your first premium is calculated via traditional criteria

Pool your premium in an online group (public or private)

Group pays claims and leftover money remains in the pool

Safer the drivers in a group, the more likely you are to get a discount

on your renewal

More people in the group the bigger your protection and the more the

claim cost is spread

Transparency is key

“Save up to 75% with Inspool – a car insurance that unites and

rewards polite drivers”

Pick the people in your pool (e.g. no hooligans)

Get premiums back if you don’t claim

Focus on making insurance not only fair, but actively not unfair “95% of people end up paying for the 5% of hooligans”

Don’t pay for: False claims, profit margins, overheads, commissions, bad drivers

Peer-to-Peer insurance

USD $13 million seed funding

Backed by Berkshire Hathaway, Everest Re, Hiscox, Munich Re,

Transatlantic and XL Catlin

Exec team made up from well-known insurance leaders from AIG

& ACE

Fully regulated insurer with security and backing

Will be a pooling mechanism, but with “big differences”

Restructure Digital Labs, Customer Labs & Operation

Customer-led and data-driven focus

IAG Ventures ShareCover – for AirBnB customers using Braintree mobile

payments

InsureLite – low-cost home building insurance in QLD

Insurance 4 That – insure by item

Vocal for insurance products re. ride-sharing eg Uber

Setting up an investment fund to buy stakes in start-ups Focusing on disruptive technology companies

Keep in touch with innovation

Seek new business models and tap into them

Already in the aggregator space

Understand and drive changing customer expectations

Don’t just find a way, find the best, easiest, way

Gen Y and Gen Z trust Google 2/3rds would purchase insurance from a non-insurer

23% would purchase from an online service provider

Transparency allows them to trust opinions of their peers

Self-driving cars Google and Volvo announced they will accept liability

Marketing gimmick or ploy?

If all Google cars have Google insurance…

Play to your advantage Knowledge

Position

Reputation

Focus on customer empowerment Industry is “out of step with consumer wants and needs”

Customers want companies to be:

timely, transparent, bold, humble and trustworthy

Mean it, don’t just tick a box

Remember, innovation isn’t about technology

Set up the right infrastructure

Hire a trained social media manager & digital team

They will know how to handle a crisis, legalities, content

Empower and integrate them

Listen

Monitor keywords and sites relevant to you

Consider a social media monitoring service

Have a social media strategy and crisis plan & protocols

Train your staff (and train them again)

“Incumbent industry leaders cannot focus simply on defending their

current market niche. Firms with vision, optimism, and agility can

realize enormous opportunities—if they are willing to disrupt their

own operations before some new challenger does it for them.”

If insurers want to retain customers and acquire new ones, there is

no choice but to adapt

Change the internal conversation, the culture, ask the hard

questions, invest the time and money

Embrace the opportunity

Not if, but when.

Dr AMY GIBBS

@AmyGibbsPhD

@ANZIIF