Insurance 2020 & Beyond

The Current Agenda of the CEO

MaarssenMei 2017

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The Journey

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The Disruption of the Insurance Sector is Accelerating

0%

10%

20%

30%

40%

50%

60%

70%

80%

2013 2014 2015 2016 2017

Over-regulation Speed of technological change

Changing customer behaviour New market entrants

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The 5 Most Disrupted Sectors

Source: PwC20th Annual Global CEO Survey

Entertainment and media

Insurance

Banking and capital markets

Power and utilities

Healthcare

Insurance is the most disrupted sector in the global economy

Q: How concerned are

you about the potential threat to your growth prospects from the following? CEOs stating “extremely concerned”

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5 Urgent Priorities

Talent

Regulation

Growth

InnovationCosts

The Agenda of the Global Insurance CEO

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5 Urgent Priorities

Talent

Regulation

Growth

InnovationCosts

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Backbook distress caused by low interest rates ….

7

Costs

• A challenge for general insurers

…. compounded by soft non-life market and FinTech margin erosion

• A crisis for life insurers

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Costs

CEO Survey: Insurance CEOs planning to implement a cost reduction initiative in the coming 12 months

8

70%59%

2015 2016

100%?

2017

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Insurers are exhibiting a much greater commitment to sustainable savings

9

Increasingsustainabilityof savings

Do with less by reducing

infrastructure

Do without by cutting costs

Do better by creating efficiencies

Do different byrestructuring the

cost base

Embed cost control capabilities and behaviours

Lo

w

Med

ium

H

igh

Le

ve

l o

f s

av

ing

s

Near term Medium term Longer term

Time to realise savings

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Is labor arbitrage really the answer?

Robotics Process Automation

Cognitive Computing

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Costs

Is Blockchain the next killer app?

A permanent, tamper proofhistory of transactions.

50% of insurers have a blockchain initiative

66% of insurers expect use cases in production by 2018

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5 Urgent Priorities

Talent

Regulation

Growth

InnovationCosts

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Digital: a sharper focus on the customer

Innovation

13

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Innovation

6yr olds show the same confidence with technology as 45yr olds

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Digital Quotient

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InnovationThe eCommerce player Alibaba is transforming the Chinese market and innovating in financial services and insurance

Three companies joined together to launch…

Ping AnTencentAlibaba

...Zhong An - the first online insurance company in China

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Innovation

Data Analytics:

Was a system challenge – now a race for talent

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Innovation

17

Data Analytics is transitioning the insurerfrom a reactive claims payer to a preventative

risk advisor

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67%

Of consumers would be willing to have a sensor attached to their home or car if doing so would lower their premiums

Innovation

18

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InnovationSensors are also allowing insurers to monitor health, deliver personalized underwriting and change customer behavior

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Trust is of critical importance to the Insurance Promise

74% of Insurance CEO’s see lack of trust in the business as a threat to growth

27% of consumers trust their insurance provider

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Innovation

21

CEO Survey: Concerned about Cyber threats?

79%Insurance

Banking

Asset Management

Non-Financial Services

74%

60%

55%

Source: PwC19th Annual Global CEO Survey

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GrowthCyber is the Corporate Terror

2013

2014

2015

$7.5bn premiums by 2020

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• Relationship Management

• RiskManagement

InnovationAndreesen Horowitz shares the 16 tech trends it’s most excited about

Virtual

Reality

Sensorifi-

cation

of the

Enterprise

Machine

Learning

+ Big Data

The Full-Stack

Start-up

Digital HealthOnline

MarketplacesSecurity

Cloud-Client

ComputingCrowd Funding

Internet

of Things

‘Failure’ DevOps Insurance

Containers

Bitcoin (and

Blockchain)

Online Video

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Incumbents are increasingly looking to partner with Fintechs

24

Incumbents... 2016Survey

2017 Survey

… not engaged with Fintechs 25% 9%

… currently partnering with Fintechs 32% 45%

… planning to partner with Fintechs - 82%

Source: FinTech Survey 2017

Innovation

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Innovation

25

LEVERAGE ECOSYSTEM AND MARKET

ENHANCE OPERATIONAL CAPABILITIES

BUILD TRUSTED RELATIONSHIPS

NEW APPROACHES TO UNDERWRITING

LEVERAGE DATA AND ANALYTICS

MEET CHANGING CUSTOMER NEEDS

27%

38%

45%

54%

65%

75%

Source: 2017 Global FinTech Survey - Insurance

The benefits of InsurTech

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Innovation

The incumbent challenge is mainstreaming innovation

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Innovation

Leading CEO’s:

• Out front, not delegating

• Articulating a clear strategy

• Digitally literate

• Endorsing experimenting

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5 Urgent Priorities

Talent

Regulation

Growth

InnovationCosts

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Talent

of insurance CEOs see limited availability of key skills as a threat to growth

81%

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TalentBut, insurers are embracing the new possibilities

Sources: PwC 20th Annual Global CEO Survey

67% of CEO’s see creativity and innovation as important in their people

61% of CEO’s are exploring humans and machines working together

Ahead of other FS Sectors

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Talent

31

CEO SurveyWhat aspects of your talent strategy are you changing to make thegreatest impact?

ETHICAL / SOCIALLY RESPONSIBLE

PAY, INCENTIVES AND BENEFITS

EFFECTIVE PERFORMANCE MANAGEMENT

WORKPLACE CULTURE AND BEHAVIORS

PIPELINE OF LEADERS FOR TOMORROW

28%

26%

35%

50%

53%

Source: PwC19th Annual Global CEO Survey

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Talent

32

With an ambition to speed decision making processes, CEO´s are focused on

creating a culture of responsibility.

Culture –“how people act

when no one is watching”

A current focus on Culture/Behaviors

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC

It’s what you do

that counts.

Not what you say…

33

Talent

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5 Urgent Priorities

Talent

Regulation

Growth

InnovationCosts

Pressure on CEOs to Balance these Priorites

“Resist short-termism. Focus on long-term value”Larry FinkFebruary, 2016

Thank you for having me!

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