INSURTECH INSIGHTS HOW INSURTECHS ARE TRANSFORMING (RE)INSURERS - WWW.PWC.COM/INSURANCE
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InsurTech Insights How InsurTechs are transforming (re)insurers www.pwc.com/insurance
InsurTech Insights
Introduction
The insurance sector is changing due to emerging risks, shifting demographics, and new
entrants, forcing traditional players to adapt. Technology, in our view, is the primary catalyst
that is transforming the insurance industry.
We see technological innovation impacting the industry in a number of ways:
1. InsurTechs are transforming
2. InsurTechs are enabling new
3. InsurTechs are innovating
4. InsurTechs are breaking
the existing value chain capabilities new products boundaries beyond insurance
Transformation of the value chain Harnessing emerging technologies and The emergence of new products such InsurTechs are also supporting insurers
through customer engagement or the products to provide (re)insurers with as cyber insurance, or usage based to innovate beyond the existing value
development of digital distribution new value-added competencies such insurance is providing opportunities to chain into new industries, providing
platforms. In many cases, data driven as the ability to assess claims through InsurTechs and industry incumbents access to new customers and markets.
process optimization is having a large drone inspections, dramatically alike, to capitalize on these new, fast This trend is evidenced in our recent
impact as new firms seek to harness decreasing claims processing times. growing markets. A plethora of start Breaking Boundaries report released
technology to drive productivity and ups are now working with and against in conjunction with Startupbootcamp
cost efficiencies through data analytics, insurers to develop new products, or InsurTech in London. The majority of
artificial intelligence, blockchain, or assist in underwriting these new risks. new startups were beyond insurance,
other emerging technologies. i.e. focused on developing products that
were either in a different industry, or
industry agnostic, but still with a large
value add to the insurance industry.
InsurTech is now ‘everyday business’ and demands strategic On the following pages we highlight strategic investments
consideration, with focused investments and partnerships. In and partnerships made by (re)insurers as they look to
fact, PwC’s 2017 Global Fintech Report identified that 84% of capitalize on the technological innovation impacting the
insurers expect to increase Fintech partnerships in the next industry. We expect this trend to continue as (re)
three to five years. insurers seek to remain competitive and responsive
to InsurTech’s impact.
PwC InsurTech Insights How InsurTechs are transforming (re)insurers 2InsurTechs are transforming the existing value chain
InsurTechs
1. are Investments / partnerships example:
Cloud-based platforms
transforming Cloud-based platforms and on-demand infrastructure facilitates (re)insurers
ability to go to market quickly and efficiently
the existing Global cloud and IP utilization
value chain
More than 70%¹ of traditional (re)insurers use cloud- will grow 3.3x2 in the next 5
based solutions years, and will account for 95%2
•O
nly 10%¹ run most of their digital infrastructure of data center traffic
using the cloud
From reinventing customer engagement and
experience, to using data-driven processes to Cloud-based services will lower the barrier to entry
optimize operating models creating expense for InsurTech companies and innovative (re)insurers,
and productivity efficiencies increase marketplace competition, and drive customer
value innovation
•N
ew players will be able to instantly stand-up all
insurance-related processes to provide a digital
experience to consumers
Marketing & Data & Claims
Product
Distribution Underwriting Management
Traditional (re)insurance incumbents will have the
Figo Coverwallet Cape Analytics Clara Analytics opportunity to run business model trials at higher
illustrative InsurTechs
frequency and lower cost structures – either through
InsurTech partnerships or proprietary projects
Reimaging the Redesigning Reinvent the Reconstruct the July 2018 May 2018 March 2017
core market and the customer use of data and operating and
product experience analytics expense structure XL Catlin Nephila Markel Markel Figo
• Reaching the un(der) • Online aggregation and • Remote data capture • Robotics and Slice Labs RenaissanceRe Boost Insurance HCS Capital
insured comparison and analysis automation in core • Slice Labs’ ICS (Insurance Cloud • Boost Insurance provides an • HCS Capital Partners has invested
• Emerging solutions for • Personalized customer • Quantification of insurance Services) platform will serve as the insurance-as-a-service platform $4M in Figo Pet Insurance, a
new markets engagement platforms emerging risks • Cloud based as-a-service base platform from which XL Catlin designed to provide backend pet insurance platform that is
• Usage or behavior based • New models of holistic • Emergence of platforms solutions will introduce their new on-demand infrastructure for InsurTech startups, underwritten by Markel Specialty
personalized insurance advice (i.e. robotic / blockchain, AI, and cyber infrastructure insurance, digital platforms, and insurance Reinsurance
artificial) other technologies tailored for small / medium products. It has partnered with • Figo Pet Insurance differentiates
businesses Nephila Capital to offer a dedicated itself by offering an integrated
• ICS provides a cloud-based platform reinsurance facility with cloud-based pet platform with
that supports the full insurance additional capacity provided by customizable healthcare, enabling pet
value chain, enabling XL Catlin to Markel and RenaissanceRe owners to manage their pet’s life
go to market quickly • Boost Insurance also serves as a
general agency for its carrier partners
1
Novarica: Cloud Adoption in Insurance,
and assists in product development,
2
isco: Global Cloud Index: Forecast and
C underwriting, compliance, and
Methodology 2016-2021
distribution
PwC InsurTech Insights How InsurTechs are transforming (re)insurers 3InsurTechs are enabling new capabilities
InsurTechs are enabling Investments / partnerships example:
Drones and weather analytics
new capabilities Increasing severity and
Increased levels of heat and moisture in the
frequency of natural
catastrophes has created atmosphere leads to more unusual weather patterns
The emergence of new
capabilities fundamentally
Capabilities are new demand for innovative
and increases the risk of extreme catastrophe events
changes not only the technologies utilized to provide claims solutions •2
017 was the 41st¹ consecutive year of above
average global land and sea surface temperatures
existing value chain but
the industry overall,
value add to the existing In 2017 there were:
Natural disasters in 2017 were among the highest
as more incumbents value chain whether through 710¹ natural catastrophes,
93%¹ of which were weather-
ever recorded
adopt these capabilities
through investments or increased efficiency, or ability to related
Event Deaths1 Economic Loss (USD)1
Atlantic Hurricanes2 4,000+ $220B
Insured Loss (USD)1
$80B
partnerships to compete
effectively
execute new tasks or analyses California Wildfires3 43 $13B $11B
Floods in Asia4 116 $7.5B 300M
Examples include: $310B¹ in overall losses of
• Use of aerial drones after weather • Mobile app based technology which only $133B¹ was insured
catastrophes to assess losses enabling for claims adjusting including (Re)insurers have the opportunity to further deploy
insurers to process claims significantly functionality to upload photos
InsurTech capabilities in claims processing and
faster than before • Utilizing artificial intelligence to 83%¹ of CAT losses occurred predictive weather analytics to help bridge the gap
• Advances in data analytics and answer customer queries, process
in North and Central America between economic and insured losses
catastrophe modelling through using claims, or to better understand and
weather, atmospheric, or maritime compare insurance policy language (incl. Caribbean)
data to better underwrite risk
Loveland Innovations KatRisk July 2018 Sept 2016/ Jan 2018 May 2017
Underwriting Catastrophe XL Catlin Maiden Re Betterview Tokio Marine / W.R Berkley
solutions modeling focused on Windward Munich RE Weather Analytics
utilizing drone flood and
• XL Catlin has invested $16.5M in • Maiden Re participated in a $2M • Tokio Marine HCC and W. R. Berkley
technology wind risk Windward, a maritime risk analytics seed round for Betterview, a leading have invested $17M into Weather
startup, during a Series C capital raise platform and service provider for Analytics during a Series B round
• Based in Tel Aviv, Windward uses capturing and analyzing data from • Weather Analytics provides
Mobile app Platform that proprietary technology to drones predictive weather insights by
1
on – Weather, Climate, and Catastrophe
A streamlining applies artificial monitor and analyze ship • Additionally, Betterview later collecting atmospheric data and
Insight
2
urricanes Harvey, Maria, and Irma occurring
H
the claims intelligence to activity including: how they partnered with Munich Re to leveraging a team of experienced
August 25-September 2, September process insurance policies navigate, when they operate, offer drone imagery, analysis, and meteorologists
18-September 22, and September 4September fortitude in rough water, and how reporting to Munich Re’s insurance
12 respectively
Snapsheet Risk Genius they maneuver in ports company clients
3
ctober Northern California Wildfires and
O
December Southern California Wildfires illustrative InsurTechs
4
ummer flooding in China and India and
S
January flooding in Thailand
PwC InsurTech Insights How InsurTechs are transforming (re)insurers 4InsurTechs are innovating new products
InsurTechs are Investments / partnerships example:
Cyber Security
innovating new products Escalating threats associated with data breaches and
cyber attacks have prompted (re)insurers and brokers
to offer risk mitigation solutions
InsurTechs are assisting
incumbents in creating
Many incumbents are Global Annual Cost of Cybercrime
Cybercrime will cost the global economy over $2T1 in
new products or lines underwriting these new risks via 2019
of business within the
insurance industry, partnerships or by making • Annual cost of cybercrime is growing faster than
services provided
+$2T1 2019
unlocking new markets investments in innovative Growing frequency of attacks due to:
and opportunities
InsurTechs
3x growth
• Limited understanding of common vulnerabilities
• Unpredictable scale of damage on critical
infrastructure
Usage-based Insurance for
Cyber • Data scarcity impedes development of cyber
or on-demand the sharing
Insurance insurance
insurance economy
$600B2
Average cost of a cyber breach was $349,0003 for
illustrative InsurTechs CyberCube Trōv Slice Labs small companies, reaching an average cost of $3.2M3
for big organizations
Zeguro Metromile Guardhog
2017
July 2018 June 2018 November 2017
JLT AXA Hartford Steam Boiler
CyberCube SecurityScorecard At-Bay
• AXA has selected SecurityScorecard, a • JLT and CyberCube will partner to • Hartford Steam Boiler (Munich Re)
leader in cyber security ratings, enhance cyber strategy and risk participated in a $6M investment seed
to provide security ratings as part modelling capabilities for clients round for At-Bay, a digital insurance
of the underwriting process for • CyberCube’s robust and innovative platform that helps organizations
AXA’s rapidly growing cybersecurity analytics include fully probabilistic mitigate cyber risk
1
Juniper Research: The Future of Cybercrime business
& Security capabilities and a wide range of • At-Bay leverages real-time data
Cybercrime will cost the • SecurityScorecard platform will possible loss scenarios collection and active client
2
McAfee: Economic Impact of Cybercrime
– No Slowing Down, global economy over provide AXA’s underwriters with monitoring to predict future risks
an overall risk rating and detailed rather than analyze historical attacks
$2T in 2019
3
NetDiligence: 2017 Cyber Claims Study
¹ view into the cyberhealth of AXA
insureds
PwC InsurTech Insights How InsurTechs are transforming (re)insurers 5InsurTechs are breaking boundaries beyond insurance
InsurTechs are breaking Investments / partnerships example:
HealthTech
boundaries beyond HealthTech and wearable Analysts forecast the global telemedicine market will
insurance technology will enable
(re)insurers to more
accurately underwrite and
grow to $79B1 during the period between
2018-2022
•Growth is driven by increasing adoption of digital
price health insurance health platforms such as mobile-health, telehealth,
InsurTechs are broadening Categorization of Startupbootcamp InsurTech Participants electronic medical records, and other wireless
their product offerings technologies
beyond insurance,
causing a shift to more Wearable HealthTech devices gather critical data – for
80%
generalist business both consumer and underwriter:
75%
models. The graph below •P
rovide users with data necessary to make healthy
highlights the dramatic 60%
changes in lifestyle
shift in Startupbootcamp •P
reemptively detect and cure life threating diseases
InsurTech participants
(2016-2018): 40%
The U.S. eldercare population will become a significant
addressable market given that approximately 20%2 of
25% people will be age 65 or older by 2030
20%
• Currently, 87%3 of adults age 65+ want to remain
2016 2017 2018
in their own home as they age, creating a demand
for HealthTech solutions that permit or support
Within insurance
independence
Startups focused on offerings specific only to the insurance industry
Beyond insurance
Startups focused on developing products that are either in an
entirely different industry or industry-agnostic, but have large value June 2018 September 2017 September 2016
add to insurance - like HealthTech
Scor / Transamerica Generali Swiss Re
iBeat CareLinx Sharecare
Scor Life & Health Ventures and Generali Global Assistance acquired Swiss Re has formed a partnership with
The global telemedicine market will Transamerica Ventures participated in a CareLinx, a leading tech-enabled Sharecare, a health and wellness
Source: Breaking Boundaries – How InsurTech
is moving beyond insurance (Startupbootcamp, grow to $79B1 during the period $10M seed round for iBeat caregiver marketplace with over engagement solution providing people
PwC), iBeat is a leading provider of a cardiac 200,000 caregivers on the platform with personalized resources
between 2018-2022
1
Global Telemedicine Market 2018-2022 monitoring smartwatch that CareLinx partners with global health The partnership is focusing on helping
2
U.S. Census Bureau: An Aging Nation: The automatically notifies emergency help, systems and insurance companies to people manage financial stress, one
Older Population in the United States, family and friends of the users’ status offer a post-acute care solution that of the leading causes of chronic health
3
AARP Survey: Livable Communities Baby and location delivers on-demand comprehensive issues
Boomer Facts and Figures support and cloud-based tools for
real-time interventions
PwC InsurTech Insights How InsurTechs are transforming (re)insurers 6Re(insurers) need to
develop and implement
focused InsurTech strategy
Conclusion
Contacts
Historically, (re)insurance transactions were often focused We have discussed four ways we see InsurTech impacting Stephen O’Hearn Leslie G. Fenton Manoj Kashyap Gero Matouschek
on consolidating or diversifying books of business. With the industry and highlighted key strategic investments and Global Leader, Insurance Managing Director, Global FinTech Leader EMEA Digital Transformation
the emergence of InsurTech, many (re)insurers began to partnerships. These have demonstrated the efforts of (re) Partner, PwC Germany PricewaterhouseCoopers Partner, PwC US and Insurance
invest in new technologies for fear of ‘missing out’ but often insurers in transforming the existing value chain (through +49 8938 0069 688 Corporate Finance LLC +91 226 669 1888 Partner, PwC Germany
stephen.t.ohearn@pwc.com United States manoj.k.kashyap@us.pwc.com +49 89 54525 634
without a strategic plan for the use of technology across the cloud-based platforms), unlocking new capabilities (with
+1 312 298 5866 gero.matouschek@strategyand.
organization. drone analytics), or creating access to new products or Patrick Maeder leslie.g.fenton@us.pwc.com Henri Arslanian de.pwc.com
The InsurTech industry has continued to mature, technology markets (with cyber security and HealthTech). There are EMEA Leader, Insurance Hong Kong and China FinTech
adoption has become more widespread, and successful other emerging trends that also merit focus. (Re)insurers are Consulting Ritendra Roy Leader Paul Mitchell
use cases have begun to emerge. We are seeing a shift to recognizing the impact of targeted investments or strategic Partner, PwC Switzerland Director Partner, PwC Hong Kong South Africa FinTech Leader
(re)insurers making targeted investments or partnerships partnerships which if executed and implemented properly, +41 798 180 104 PricewaterhouseCoopers +852 2289 2490 Director, PwC South Africa
can unlock meaningful value for their organizations. patrick.maeder@ch.pwc.com Corporate Finance LLC henri.arslanian@hk.pwc.com +27 21 529 2001
to achieve strategic initiatives and augment (re)insurers’ United States paul.Mitchell@za.pwc.com
capabilities. InsurTech is also enabling (re)insurers to expand In order to compete effectively, (re)insurers need the right Javier Baixas Vallas +1 646 818 7098 Glynn Austen-Brown
beyond insurance into adjacent markets that have value-add talent, strategy, ability to execute on deals/partnerships, and Global InsurTech Leader ritendra.roy@us.pwc.com UK Insurance FinTech Leader John Shipman
to their business models. finally, a viable plan to implement the InsurTech’s capability Partner, PwC Spain Partner, PwC United Kingdom Asia-Pac FinTech Leader
for their organization. We expect those who struggle on these +34 915 685 484 Luke Hilditch +44 7383 013 933 Partner, PwC Australia
fronts to fall behind their competitors. javier.baixas.valls@pwc.com Associate glynn.austen-brown@pwc.com +61 8266 0198
PricewaterhouseCoopers john.shipman@au.pwc.com
Arthur Wightman Corporate Finance LLC
Bermuda/Caribbean Insurance United States
Leader +1 312 660 9522
In order to compete effectively, (re) Partner, PwC Bermuda hilditch.b.luke@us.pwc.com
insurers need to execute on deals and +1 441 299 7127
arthur.Wightman@bm.pwc.com Dmitry Simakov
partnerships, AND a viable strategic Analyst
plan to implement the InsurTech’s PricewaterhouseCoopers
Corporate Finance LLC
capability for their organization. Those United States
+1 312 596 9086
without a technology strategy will be dmitry.simakov@us.pwc.com
left behind.
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