insurance - opportunities in a digital and changing world

© PA Knowledge Limited 20141PA CONFIDENTIAL - Internal use only FORSIKRING 2016 – OPPORTUNITIES IN A DIGITAL AND CHANGING WORLD

Forsikring 2016

Opportunities in a digital and changing world


Creating value from digital

Unlockingthe valueof digitalbusiness

It is collaborative and social in

nature

It uses data to really tailor the

experience

It experiments

and innovates

It allows customers seamless

engagement across

channels

It is efficient, lean and

highly responsive

It puts more control in the hands of the

customer

It’s digital on the outside and on the

inside

Providers will need to explore and exploit all opportunities to use the digital environment to enhance the value they create for customers and stakeholders at a lower cost.

Digital can help reshape how providers operate,

who they partner with to shape the proposition

and how they work to deliver it.

Each component of the digital business has the

potential to drive higher returns and open up new

opportunities.


Insurance and pension 2014

Claims Customer retention Threatening disruption

In the last five years, the number of smart solutions and connected devices (IoT) has increased fourfold*, and it is estimated that

there will exist 50 billion connected devices by the end of 2020**

Between 12%-16% of insurance

customers changed main

insurance company over the past

year, 8% expect to changed within

the nearest future****

The average NPS score in the

sector is -6*****

The customers add low value to a

product and do not feel any

loyality; instead they buy in the

basis of price.

Likely players who will create new

ecosystems******

Apple

Google

Telcos

Manufacturers of household

appliances

Energy and utility companies

Other major technology companies(e.g. Samsung, Microsoft)

Insurance companies

Most likely

Least likely

67%

61%

50%

44%

28%

22%

6%

Sector challenges

New potential services Position Digital considerations

• Dominant in the ecosystem

• Partner agreements

• Passive involvement.

• Identification and prevention of leakage and

moisture

• Repairs and maintenance

• Protection against extreme weather conditions

• Security

• Fire prevention.

• Access and use of data

• The organisation’s brand

• Customer experience

• The ability to innovate

• The digital capability.

DRIVERS OF

CHANGE

EFFECT ON

INSURANCE

COMPANIES

Source: *Business Insider Intelligence, **Cisco, ***ABI, ****Chartered Institute of Loss Adjusters, *****FBI kvartalsrapport

Smart cars

Connected

Homes

DKK

… in a changing world…


Technology Tipping Points

The Internet of Things

Implantable Technologies

Supercomputer in Your Pocket

Storage for All

Smart Cities

Artificial Intelligence

Wearable Internet

The Connected

Home

Driverless Cars

The Sharing

Economy

3D printing

Bitcoin and the

Blockchain

Vision as the New Interface

Robotics and

Services

Big Data for

Decisions

Our Digital

Presence

WEF_GAC15_Technological_Tipping_Points_report_2015.pdf

WEF_GAC15_Technological_Tipping_Points_report_2015.pdf


Driverless Cars

More time for focusing on work

and/or consuming

Upend existing models of

transportation and logistics

Less congestion and emissions

Improved safety

The tipping point: Driverless cars equalling 10% of all cars on US road

Expected date: 2026

By 2025: 79% of respondents expected this tipping point to have occurred


The Sharing Economy

The tipping point: Globally more trips/journeys via sharing cars than in private cars

Expected date: 2025


"Uber, the world’s largest taxi company, owns no vehicles.

Facebook, the world’s most popular media owner, creates

no content. Alibaba, the most valuable retailer, has no

inventory. And Airbnb, the world’s largest accommodation

provider, owns no real estate. Something interesting is

happening.“

Forbes.com


Wearable Internet

The tipping point: 10% of people wearing clothes connected to the internet

Expected date: 2022


“How would you be interested in wearing/using a sensor

. device, assuming it was from a brand you trust, offering a

. . service that interests you?”

Source: North American Technographics

Consumer Survey, 2013


The Internet of Things

The tipping point: 1 trillion sensors connected to the internet

Expected date: 2022


Heat your home efficiently

Make sure the oven is off

Track down those lost keys

Light your home in new ways

Check on your baby

Remember to take your meds

Track activity levels

Stay out of doctors office

Receive pollution warnings

Light street more effectively

Automatic parking finding

Keeping streets clean

“The Milky Way, the earth’s galaxy,

contains around 200 billion suns.

Worldwide, more than 50 billion

devices are expected to be

connected to the internet by 2020.”

World Economic Forum


Insurance Internet of Things

14,5%

13,7%

11,0%

6,1%

14,1%

40,7%

What is the greatest challenge slowing IoT adoption for insurers?

9,1%

22,1%

24,7%

19,8%

11,8%

4,9%

7,6%

Where is the value for insurers in applying IoT in their business?

Source: FC Business Intelligence, 2016


Where would you like to play?

You will need to embrace the changes in customer behavior and new technology by improving your current offering whilst experimenting with future business models

Status quo – competing by a cost focus of stream lining

current products and services.

Seeking to improve customer experience by optimising and

improving existing solutions, e.g. incorporating new

channels.

Working with new business models and value-adding

activities to suit new customer behavior and needs, e.g.

AirBnB and Uber.

Staying ahead of the curve by incorporating new

technologies to create new ecosystems with opportunities

for growth.

1

2

3

4

1

2

3

4Better use of

existing setup

Existing products,

services and experience

New markets and

service experience

New ecosystems

Adoption

Low

Business as usual Disruption

Insurance market

Dig

ital cu

sto

me

r exp

eri

en

ce


Engaging the next generation of customers

Providers need to look ahead 10 years to deliverengagement with future customers. To survive and thrive will mean establishing

stronger relationships with more customers, at

increasingly competitive price points, while

operating more cost effectively.

That can only happen if customers are doing more for

themselves and the human element – in both advice and

service – is concentrated on the points where

it adds the most value.

Consumers will demand higher levels of service from insurance providers and will expect these services to be on a par with the

same experience they receive from those who stand out in a crowded marketplace as delivering exceptional personalised

experiences.

74%of FS companies struggle to

Improve the customer experience

through digital innovation

PA Digital Barometer Survey


Plotting the customer journeys

The expectation of customers today is that there will be no barriers in their dealings with providers.

With this increased choice comes greater

expectations that customer interactions

will be channel agnostic, relevance based

and truly designed around customer

needs.63%of FS companies aren’t

delivering a seamless integrated

customer experience


Seamless channel interaction is criticalThere are many customer journeys a customer can take,

based on key factors including the advice or guidance

taken, the chosen insurance and who provides the

service.

Customers want to follow these journeys using a blend of

digital (mobile, tablet, desktop), telephony and face to

face (physical and virtual).


Getting value from data

Customer experience needs to beconnected across all channelsHow can providers who lack a single view

of the customer hope to paint a rounded

picture of each the individual

circumstances affecting customers in

attempting to deliver a tailored,

personalised experience? Having the data to enable the detailed knowledge of customer needs is now critical because the customer behavioursare fundamentally changing

Effective Customer Relationship Management is

not a new concept, but it has been hard to make

the case for change given legacy issues and a

lack of a cohesive data strategy.

The capability of Customer Experience

Platforms can enable re-orchestration of data

within insurance providers to provide internal

and external facing systems with the ability to

decide and predict the right outcome for

customers.

64%of FS companies are unable

to use data effectively to tailor

the customer experience



Reinventing advice

The challenge of simplified advice can be resolved by emerging technologies.Artificial intelligence engines will improve the ability to deal with different

customer needs, and the customer experience will improve beyond

recognition with the likes of virtual reality, gamification and virtual

assistants.

Data capture will also become easier as existing customer databases

evolve into data that can be integrated into robo-advice processes.

“With face to face advice becoming a preserve of wealthy clients, providers need to look at the benefits of robo-advice solutions to deliver simplified and straight-through propositions.”

Vaughan Jenkins

Head of Financial Technology at PA

| 11

63%of FS companies don’t believe

they can easily integrate with

third-party solutions



Leveraging cloud based solutions

PA uses cloud-based services to help organisations create innovative, cost-effective and scalable IT solutions, from concept development to design and delivery.

To move at pace requires flexibilityto delivery change quickly

Cloud computing is no longer a fad

embraced only by brave early

adopters. It is an established and

proven game changer for all

businesses - large or small.

Benefits of cloud platform:

Cloud app solutions, such as mobile apps, social

apps, business process apps, and websites

Big data solutions, such as interactive tools, trend

detection and BI dashboards, using Google

BigQuery.

67%of FS companies struggle

to bring new products and

services to market quickly



Overcoming legacy

Enabling efficiencies through FinTechIn firms where the cost of changing content

on an output can run into millions, the idea

of launching a fundamentally new product,

or delivering a digital proposition that

actually speaks to underlying product

platforms in any transactional way, feels

like another world.Increasingly, manageable solutions and technologies are available off-the-shelf, with a relatively straightforward integration and flexible customisation overhead.

Solutions such as user-interface enablers from

Avoka and Vizolution, to workflow innovators

and verification automaters, there are myriad of

options to partner with leading edge technology

players to cut both cost and time out of the

transformation process.

66%of FS companies believe

technology is holding them back



Time to think and act differently

Digital transformation cannot be done in isolation. You will need to embrace both your traditional business, insuretech companies and other players to form new eco-systems

Those who win will be those that can adapt to change striving to incubate ideas into transformational propositions.

DECENTRALISED

Business units

Digital

InnovationDigital

Innovation

CENTRALISED

Business units Business units

Digital

Innovation

SEPARATED

Digital role Non-digital role

VALUE STREAMS

Business units

Digital

Innovation


Deploying change faster

There are a number of techniques and processes that can help providers transform through adopting agile.Adopting agile requires a significant change for both the organisation and

its individual employees including not only those within Change & IT

teams but crucially the business overall.

Agile is no longer just a methodology, but a culture in its own right.

Agile has the capability to:

Approached correctly, Agile has the potential to delivery projects 3 times

more quickly than traditional waterfall projects delivering substantial cost

benefits.

Deliver better products faster

Simplify organisational complexity.

Create value and reduce risk.

Train and empower digital.

62%of FS Companies don't believe

their existing governance

models are suitable to deliver

digital change quickly.



Enabling transformation

Success in releasing the capability of digital transformation will require providers to align their culture and capabilities to deliver change.

Providers need to look at their overallorganisational capability. We definethis as the culture that will drive digitaltransformation.

Providers will need to enhance their digital capabilities across the organisation to drive transformation change.

| 6

50%of FS companies don’t

believe they have the skills

to succeed


70%of providers will continue

to outsource to focus on

core business

PA 2015 IT Outsourcing Study


Facing up to the digital challenges

Challenge Capability Enabler

Customer Experience DataCustomer Experience

Platforms & Analytics

Advice AutomationRobo-Advice &

Simplified Propositions

Legacy Systems IT DeliveryAgile Delivery

& FinTech

Proposition

Development

Research &

DevelopmentInnovation Labs

Technology FinTech Architecture

Organisational Silos Culture TransformationBusiness Design

Frameworks

Distribution Technology Partners Integration Services

Through our discussions with providers it is clear that to enable new digital capability requires a number of challenges to be overcome. We have identified the capabilities that providers

are seeking to strengthen their digital

propositions.

Delivering this enhanced capability will require

providers to invest in the underlying enablers that

aid transformation.

The challenges facing providers to deliver their

digital capability require strategic decisions to be

delivered, together with a clear mandate to drive

change forward.


How to succeed with your digital transformation?


Culture &

Leadership

People &

Skills

Structure &

Location

Strategy &

Governance

Application

&

Technology

Information

ProcessInfrastructure

& Facilities

Sourcing &

Suppliers

CUSTOMER MODEL

DR

IVE T

HE T

RA

NS

FO

RM

ATIO

N

PR

OG

RA

MM

E

DELIVERY

DIRECTION

DIFFERENTIATION

THINK DIGITAL

Set the Digital Business Pathway

ORGANISE DIGITAL

Access critical resources

BE DIGITAL

Ensure exceptional delivery and control

Enabling your digital transformationOur transformation model helps clients understand the necessary elements required to deliver digital transformation.


Digital Strategy

Digital Delivery

Digital Design

Innovation & Business Design

How can digital integrate with our business

strategy and leverage our proposition

and customer experience?

How can I overcome legacy IT platforms

and deliver technology change more quickly

and effectively?

How can I deliver new propositions to the

market and optimise the organisation structure

to enable digital change?

How can we design the customer experience

and optimise our channels to deliver new routes

to market and lower transaction costs?

?

Enabling your digital transformationOur clients typically start by getting these four areas right.


Enabling your digital transformationThe four digital focus areas will need to be supported by a range of new capabilities – and to gain the right pace you will need to build your digital capabilities as you go.


We make the difference

Claus Høyer Madsen

Partner, Head of Digital, Nordic

Tel: +45 39 25 50 00

Mobile: +45 40 70 60 35

E-mail: [email protected]

www.paconsulting.com/digitalbusiness

@GoDigitalPA


Setting up the organisational design for a new digital platform

How PA helped

Our team developed Worldpay’s digital strategy, defining their digital

objectives, and future state vision. In delivering their roadmap we:

• Undertook an Audit of all current capabilities and where key deficiencies

existed and benchmarked competitor analysis

• Initiated a future state view of what the experience should be like.

• Undertook a gap analysis of the capabilities needed vs those that

currently existed

• Outlined the roadmap in 3 phases ( fix, develop, grow) spanning a 3 year

period

• Delivered the outline 3 year business case with more detail for year 1.

Included detailed costs for the " fix" phase.

• Managed stakeholder engagement and defining linkages to the broader

new Worldpay Brand Programme.

We then supported implementation of their new digital platform.

The client issue

Worldpay are one of the world’s leading payment companies. They asked us

to help shape the future strategic and operational management of their new

digital estate.

The initial 12-week strategy engagement determined Worldpay’s digital

strategy and achieved Executive Team sign off for overall digital programme

and initial tranche of funding for Delivery Phase 1.

PA Consulting provided us with a great combination of thinking and delivery. This went from defining the types of digital capabilities we would need to compete in our markets and reflect our new brand positioning, through to the hands on delivery of the first phase of our activity.

The team worked tirelessly to deliver the solution, and their efforts have now helped us show a more consistent, effective and engaging face to our different audiences across the globe.”

Chief Marketing Officer and Product Officer, WorldPay

“


Delivering digital transformation

The client issue

Royal London were embarking on a major brand transformation programme,

bringing together a number of siloed companies under a single new brand.

Their digital platforms had grown organically over a number of years, using

disparate systems and teams to manage a complex digital estate.

Royal London needed to ensure their digital presence supported their new

brand objectives.

How PA helped

PA successfully led Royal London’s Digital Transformation from strategy and

design to delivery. We then took responsibility to deliver some of the critical

workstreams while supporting others to achieve multiple outcomes. These

included:

• Development of an overarching digital strategy

• Approach to customer experience design

• Creating User Experience design patterns

• Creating requirements definition and test frameworks

• Managing 3rd party digital design companies

• Engaging with internal digital marketing teams on content migration

• Providing acceptance criteria and testing pre-production

• Providing "go-live" support

Setting up for success

PA also set up the governance and structure to manage the transformation

programme which included the establishment of a Working Group and

Steering Group consisting of Business Unit leads that acted as the decision-

making authority including implementing the Programme.

As separate brands started to integrate it was clear that Royal London's digital

organisation needed to be reviewed. Working across a range of stakeholders

and involving their Group Executive team, PA conducted:

• Analysis of business unit strategies, formulating an overall group strategy

• Analysis of operational units assessing skills, resources, demand and

programmes to identify gaps in delivery model

• Presenting a series of option "models" to which digital could be re-aligned

and serviced more effectively throughout the company

• Achieving sign-off from operating CEO's and Group CEO to implement

new target operating model

PA were instrumental in achieving deliveryof our brand transformation programme anddelivering our digital strategy, executing thedelivery whilst supporting our business and ITteams throughout.”

Group Brand Director, Royal London Group“


Transforming one of Sweden’s leading

insurance companies to a digital

customer service

PA was chosen to design and run a programme to

establish an Omni-channel approach for its

customer services. PA worked with the finance

company from the initial business case to the

implementation and Go-live of a new multi channel

customer centre.

Quality assuring the strategy and

organisational capabilities for a global bank to

deliver its Digital Transformation.

Within large and complex universal banks, the maturity of the

Digital agenda varies widely. Consequently this directly

affects the organisation’s ability to deliver on its digital

promises to all stakeholder groups. One of the principle

enablers of a successful transformation program is the ability

of the organisation to articulate a clear and connected

business strategy.

Helping a leading insurer to digitise

the payments process to reduce

transaction related costs.

PA helped the client with the design of a digital

payments solution which were in line with the

client’s strategy to migrate to a digital platform for

all customer engagement. As a result, automation

of transaction processing increased by 60-70%

greatly reducing costs and improving efficiency

and customer satisfaction.

Driving the digital transformation

for a Savings & Investment provider

PA supported Standard Life in a number of high-profile areas

of its transformation programme, including roadmap

development, programme shaping and delivery, cultural

change and reviewing the firm’s technology plans.

The work included developing a group-wide digital strategy

and significantly re-engineering Standard Life’s B2B digital

offerings, as well as developing a direct-to-consumer

capability.

Digitising Financial Services


PA has been invaluable to us through the launch of our new website and development of new functions.

They have been fully integrated into our Online IT and Business teams and have worked tirelessly alongside JL Partners to achieve our £1 billion online target ahead of schedule and online sales that are around 30% of total John Lewis revenues.

Paul Coby, IT Director, John Lewis

Our digital capability recognised

“


PA is a consulting, technology and innovation firm. We define success as achieving exceptional results that have a lasting impact on businesses, communities and individuals worldwide. This principle has remained the cornerstone of our ethos for over 70 years – and it continues to underpin everything we do.

In the changing world of retirement, we are uniquely

positioned to inject rigour into business design,

partner selection, customer experience, data and

analytics which is underpinned by our experience in

Digital, Delivery, Assurance, Strategy and

Technology.

Our clients choose us because we challenge

convention to find the solutions that really work in

practice, not just on paper.

Over 100 digital consultants enable us to serve our clients to enable

their digital transformation.

Supported by 2,500 consultants globally

Developers & Architects

Supply Chain Experts

IT & Business Analysts

Data & Decision Scientists

Hardware Engineers

User & Customer Experience Experts

Deep Sector Specialists

Programme Delivery Managers

Business Design Experts

Strategists


Contact Us

Claus Høyer Madsen

Partner, Head of Digital, Nordic

Tel: +45 39 25 50 00

Mobile: +45 40 70 60 35


www.paconsulting.com/digitalbusiness

@GoDigitalPA

Corporate headquarters

123 Buckingham Palace Road

London SW1W 9SR

United Kingdom

Tel: +44 20 7730 9000

paconsulting.com

We Make the Difference

An employee-owned firm of over 2,500 people, we operate globally from offices across the Americas, Europe, the Nordics, the Gulf and Asia Pacific.

Our deep industry knowledge together with skills in management consulting, technology and innovation allows us to challenge conventional thinking and deliver exceptional results that have a lasting impact on businesses, governments and communities worldwide.

Our clients choose us because we don’t just believe in making a difference.

We believe in making the difference.

Amdi Hansen

Partner, Operational Excellence

Tel: +45 39 25 50 00

Mobile: +45 40 99 46 90


Martin Tillisch

Partner, Financial Services

Tel: +45 39 25 50 00

Mobile: +45 40 99 46 42
