cpcu 2016 future of underwriting insurtech

CPCU ANNUAL MEETING

Future of underwriting

September 2016

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TECHNOLOGY IS DRIVING SEISMIC SHIFTS

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1. The Manual to Digital Shift

Driverless cars Smart machines with ability to think Wearable devices

Technology is fundamentally challenging assumptions about what is a machine – covering all aspects of life making work easier, simpler, better – almost like a super-human assistant

There is a superhuman assistant for all your needs….

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2. Mobility and Flexibility

Technology is changing how things are done , mobile work from home, closer collaborations – sharing screen data, editing one video, one document being worked upon by multiple people, social networks

Time and place no longer matter – anywhere anytime is the buzz-word

Source: Citrix.com

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3. Immediacy

Instant gratification – 24 by 7 convenience, faster way to do everything, simpler, objective interpretations, on demand, information at finger tips

Everything is available at a click, on demand

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4. Nature of Data is Changing

Simpler, visual, aggregated, easily available, greater ability to learn big data, complex data is turned into meaningful bytes easily, businesses using big data, 3D imaging – data is more real

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5. Many in One – The era of more

Multi-tasking, ability to be in many places at once, as geographical distance does not matter, automate tasks, connected devices with one touch control, smart home appliances

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6. Time is the new currency

Time-saved is money saved, improvement in productivity, time efficient technologies, everything is faster than before - automate tasks to save time, smart CRM systems, paper to online, get all data in one place for a meeting to start

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7. Open cultures – less hierarchy, less predefinitions

Roles are not strictly pre-defined, more collaboration, ability to cross-task, functional and organizational hierarchies are disappearing, less formal, social networking, collaboration tools

8. The Workspace of Future

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Fast, Information at a ClickEase of Collaboration

Manual to DigitalSegregated to IntegratedTime consuming to Within minutesIndividual to CollaborativeFormal to FlexibleTextual to VisualCluttered to Simplified

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LEADING TO CHANGE MAJOR CHANGES IN INSURANCE

Expectations: Insurance Innovation

12Source Hype Cycle for P&C Insurance, 2016“, Gartner, June 2016

Expectations: Insurance Analytics

Next 2 to 5 Years• Advanced Analytics Solutions• Insurance Data Models• Agency Portal Solution Digitization• Use of Social Media

Next 5 to 10 Years• Smart Machines• P&C Insurance APP Store• Telematics• Insurance Data Models• Wearables

Expectations: Near and Mid Term

Insurance will be disrupted!

• Internet of Things (IoT)

• Drones, Autonomous Cars,

Telematics

• Big Data & Artificial Intelligence

• Genetics & Wellness

1Smart

Machines

2New Paradigms

3Non Traditional

Competition

• Property/Title centrally registered –

globally (Blockchain)

• New Risks appear, some dissapear

• Switch on/Switch off coverage

• Consumer channels

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• What are core capabilities for future success?• How will you prepare and when do you move?• What impact does it have on your Capital?

• Social Insurance (Crowd sourced)

• Non-Insurance entrants

• Re-Insurers

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HOW WILL ROLE OF THE UNDERWRITER CHANGE?

Evolution: Commercial Insurance Underwriting

Manual Automation

• 2x Underwriting Productivity

• 2% Loss Ratio ↓• 0.5% Expense Ratio ↓

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How underwriters have been traditionally- 70% time spent on low value tasks- Trouble getting information in one place- Swivel chair and integration issues- Challenge comparing data from multiple sources- Communication gaps when collaborating with experts and brokers

Solution: Work Smarter

TECHNOLOGY &BIG DATA REQUIRE RETHINKING YOUR APPROACH 17

WAKE UP!!!18

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Experian, Lexis Nexis, PASCall Credit,Telematics….

Unstructured EXTERNAL

INTERNAL

PAS, Datawarehouse, Claims, Billing…...

Search, Aggregate, Analyse, Visualize and Learn Processes Transformed

1. Case Underwriting

2. Renewal Analysis

3. Portfolio Analysis

4. Data Validation (e.g. Quote information validation, Automated Premium Audit for WC)

5. Form Filling (e.g. Enabling B2C SME Business, Quick quote, etc.)

6. Large Loss Investigation

7. Proactive Marketing

Structured EXTERNAL

The Future of Commercial Underwriting

*Includes machine learning and deep learning

Descriptive AnalyticsWhat is happening

Confirm

Hindsight

AnalyticalTechnique

Outcome

Process

Traditional ApproachForm

TheoryObserve

Data

Diagnostic AnalyticsWhy did it happen

Predictive AnalyticsWhat is likely to

happen

FormTheory

Foresight

New ApproachObserve

Data*Identify

Pattern

Prescriptive AnalyticsWhat should I do

about it

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Commercial Underwriting

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Fundamental: Transformation of Risk Assessment

• Statistically Similar Unique Risk Propensity

Looking Backward Looking Forward

Evolution: Commercial Insurance Underwriting

Manual AssistedAutomation Artificial Intelligence


• 2% Loss Ratio ↓• 0.5% Expense Ratio ↓


• 5% Loss Ratio ↓• 1 – 2% Expense Ratio ↓

• 10x Productivity• 2x Growth• 10 – 15% NCOR ↓

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• More strategic Understand the big picture about customers and hence predict desirable leads, cross-selling opportunities, messaging

• More innovative Help with product development by defining requirements, pricing frameworks, key trends based on third party data and customer behavior – unique insights

• More customer centricBuild and enable a “team approach” to account servicing via collaborative tools and democratic information access. Leading to better solutions and increased customer loyalty.

• More data savvy Machine learning, AI and big data enable to use analytical approach to improve precision and new kinds of data prediction and predictive modeling.

The Evolving Role of Underwriter

Source : E&Y

Underwriter of tomorrow will straddle multiple roles, beyond the current job predefinitions.

Underwriters of The Future

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Expectations: Insurance Innovation


Expectations: Insurance Analytics
