Keynote Future of Insurance - CB Insights
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Keynote
Future of Insurance
1
22
About Me
Managing Analyst, Financial Services, CB Insights
@mlcwong | mwong@cbinsights.com
● Managing analyst at CB Insights, leading a team of research analysts
covering startup, venture capital, and corporate strategy activity and
trends in financial services
● Launched and writes CB Insights’ Insurance Tech newsletter, which
reaches 40K insurance executives and investors
● Featured in The New York Times, The Wall Street Journal, Bloomberg,
CNBC, and The Financial Times; appearances on Bloomberg TV and
Business News Network
● Magna cum laude graduate of Northwestern University
3
What We’re Going to Cover
1 2 3 4
Why change is Two types of P&C Why speed is more How incumbents
coming to P&C innovation important than ever should prioritize
4
Today, P&C insurance is a $617B market in the US
Property & casualty industry premium mix
Accident & Health
• 40% of premiums are
1% private passenger auto
• 14% of premiums are
homeowners
45%
54%
Commercial Lines Personal Lines
Source: S&P Market Intelligence, Fitch, CB Insights analysis 5
The nature of the P&C insurance industry today
sets it up for massive change
Existing business is Growth opportunities
hypercompetitive demand new approaches
6
The P&C insurance industry is becoming
more competitive every single year
Number of property & casualty filers, 2008 - 2018
2842 2831 Only 71 carriers have net
2794 written premiums >$1B
2769
2743
2706
2666
2639
2620 2606 2600
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: NAIC, A.M. Best 7
Many auto insurance incumbents are already
losing market share to direct writers
Personal auto market share over time, legacy mutuals & Allstate vs. direct writers
Source: William Blair, S&P Market Intelligence. Legacy mutuals include American Family, Farmers, Liberty Mutual, Nationwide, and State Farm. 8
The $100B small commercial market is growing,
but insurers will need to adjust to digital natives
~5% of small
business insurance is
Small $103
commercial $85 $95 bought through digital
DWP ($B) channels today.
But more than 60% of
small businesses in
Large & the US will be owned
Middle market by millennials/Gen X
by 2020.
2003 2008 2013
Source: A.M. Best, Conning, Accenture, CB Insights analysis 9
Cyber insurance is a major growth opportunity,
but has been bumpy as insurers remain cautious
Cyber insurance total direct written premiums ($B), 2016 – 2018
$2.00
$1.86
8% YoY
growth
$1.35
37% YoY
growth
2016 2017 2018
Source: S&P Market Intelligence, Fitch, CB Insights analysis 10Global insurance tech investment reached $4.15B
in 2018
Insurance tech investment trend, 2012 - 2018
Dollars ($M) Deals
$4,500 300
$3,000 200
$1,500 100
$- 0
2012 2013 2014 2015 2016 2017 2018
Source: Willis Towers Watson – CB Insights Quarterly InsurTech Briefing, Q4 2018 11P&C-focused startups are outpacing L&H startups
for investment deals
Insurance tech deal activity, P&C vs. L&H, 2012 – 2018
200
P&C
150
100 L&H
50
0
2012 2013 2014 2015 2016 2017 2018
Source: Willis Towers Watson – CB Insights Quarterly InsurTech Briefing, Q4 2018 12There are two ways
to think about tech
innovation in the
P&C industry
13Enablers Challengers
Software products and services built for Insurgents becoming insurance providers or
insurance providers distributors themselves
14Three key reasons why enabling technologies
are more powerful in P&C today
Ability to use cloud and Ability to create and access Ability to leverage
mobile in new ways new data sources advancements in AI/ML
15Insurers are adopting the use of mobile photo
estimating in the claims process at a rapid rate
The number of insurers using Snapsheet’s virtual Half of Allstate’s insured vehicles are now
auto claims technology has doubled since 2016 inspected through its QuickFoto claim mobile app
70+
60
45
35
vs.
2016 2017 2018 2019
Source: News mentions, Allstate, CB Insights analysis 16Mobile telematics providers are building up vast
datasets and aiming to shift customer behavior
Driver miles (in billions)
180
200
150
100
50
0
Source: Company blog posts, State Farm, Discovery Insure, CB Insights analysis 17Mobile is entering the property claims industry,
cutting down on time and cost
Source: CB Insights analysis 18Three key reasons why enabling technologies
are more powerful in P&C today
Ability to use cloud and Ability to create and access Ability to leverage
mobile in new ways new data sources advancements in AI/ML
19Companies are pairing the growth of geospatial
data with advances in image classification
Nearmap provides enablers with vertical In 2015, a deep neural network approach outperformed
coverage of >71% of the US population humans in the ImageNet Challenge for the first time
Source: CB Insights analysis 20450M safety inspections a year are completed
on SafetyCulture’s iAuditor app
Companies using iAuditor to conduct workplace
inspections by year
23,000
15,000
6,000
2016 2018 2019
Source: SafetyCulture, CB Insights analysis 21Three key reasons why enabling technologies
are more powerful in P&C today
Ability to use cloud and Ability to create and access Ability to leverage
mobile in new ways new data sources advancements in AI/ML
22Shift is aggregating claims data to build AI
models aimed at combating insurance fraud
Shift Technology insurance customers over time
70
45
Shift signs first
insurance
customer
2015 2017 2018
Source: Shift Technology, News mentions, CB Insights analysis 23Enablers Challengers
Software products and services built for Insurgents becoming insurance providers or
insurance providers distributors themselves
24Remember P2P insurance?
Wikipedia revision history: Lemonade homepage:
P2P Lending vs. P2P insurance Then and now
200 December 2015
150
P2P Lending
100
Today
50 P2P Insurance
0
Source: Wikipedia, Lemonade, CB Insights analysis 25The real change came from reinsurers and
carriers enabling digital MGA startups
Applying the MGA model to venture-backed Now, programs such as Munich Re Digital Partners
insurance startups used to be rare have helped venture-backed MGAs proliferate
(1999)
(2013)
(2013)
Source: CB Insights analysis, Munich Re 26Challengers are attacking incumbents across
three vectors
Cloud and mobile Use of data/AI Customer acquisition
27Root’s try-before-you-buy approach to mobile
telematics is growing fast
Root Insurance, direct written premiums ($M)
$88
$51
$33
$15
$8
$3
Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Source: Root, CB Insights analysis 28Coalition is taking a dynamic approach to
underwriting cyber based on cybersecurity posture
Source: Coalition, CB Insights analysis 29Hippo leverages a trove of data to pre-fill home
insurance information
Data analyzed on the back-end:
• Tax and county records
• Aerial and satellite imagery
(from different points in
time)
• Inspection reports
• Past claims reports
• Listing information
Source: Hippo, CB Insights analysis 30Next Insurance is striking partnerships across
different types of small businesses
Next Insurance now covering over
1000 classes of business
May 21, 2019
Source: Next Insurance, CB Insights analysis 31Why incumbents
need to act faster
32Insurgents are unbundling multi-line carriers
US-based startups (not exhaustive), for illustrative purposes only 33Direct writers now have their sights on small
commercial
Source: CB Insights analysis 34Big insurers are already preparing for an
autonomous future
Number of patents mentioning “autonomous vehicle”
Uber
Fort Motor Company
Toyota Motor Corporation
Waymo
General Motors
Google
Baidu
State Farm
Zoox
IBM
0 50 100 150 200 250
Source: CB Insights Patent Analytics 35How incumbents
should prioritize
threats and opportunities
36Understand that new entrants aren’t limited to
insurtech startups anymore
"The success of the auto
companies getting into the
Auto companies are getting
insurance business are probably
into the insurance business
about as likely as the success of
the insurance companies getting
into the auto business."
Source: 2019 Berkshire Hathaway Annual Meeting 37Focus on where control of your customers and
their data is changing
Online payroll platform Gusto Digital mortgage software Credit Karma Auto provides a
works with 60,000 small provider Blend processed one-stop shop for car info,
businesses, up from 50 more than $230B in mortgage such as car insurance
in 2012. loan applications in 2018. estimates, to 10M+ users.
Source: News mentions, CB Insights analysis 38Don't just copy the startup playbook, incumbents
won't always find the same opportunity for growth
Launched: 2018
Shut down: 2019
• 50% of Finn users were existing Chase
customers
• Unwilling to compete on annual % yield
• Undifferentiated on mobile banking features
39Focus on prioritizing emerging tech trends
Commercial data
Drone inspections Geospatial analytics automation Virtual auto claims Conversational AI
Market strength Market size: Commercial drones Market size: Geospatial data Market size: Natural language Earnings calls: 75+ mentions Earnings calls: Mentions of
stats to reach $3.6B by 2024 analytics to reach $74B by 2021 processing to reach $16B by of “auto claims” since the “chatbot” up +363% YoY (1H18
VC funding: Five-year high of News: Mentions of “geospatial 2021 start of 2017 vs. 1H17)
$568M in 2017 data” +45% YoY in 2017 Patents: 300+ NLP patents filed VC funding: $316M total funding
since 2016
Startups Kespry, DJI, Airware, Cape Analytics, BetterView, Groundspeed Analytics, Snapsheet, Metromile, Rasa Technologies, Spixii,
PrecisionHawk, EagleView Orbital Insight, Insurdata HyperScience, Captricity, Eigen Tractable RightIndem, Pypestream,
Technologies Automat, Ushur, Avaamo
Notable investors
Partnerships
Others: Munich Re with Others: Nephila Capital, Security Others: QBE with HyperScience, Others: Tokio Marine with Others: Helvetia with Rasa,
PrecisionHawk First with Cape Analytics Hiscox with Eigen Technologies Metromile, Ageas with Hiscox with Hi Marley
Tractable
40Focus on prioritizing emerging tech trends
Commercial data
Insurtech-as-a-service Hyperlocal weather analytics augmentation Cyber risk analytics Commercial auto telematics
Market strength News: 120 mentions of “on- Earnings call: Mentions of “bad Market size: Small business Market size: Cyber insurance Market size: Commercial fleet
stats demand insurance” since 2016 weather” +97% YoY (1H18 vs. insurance to reach $100B+ to reach $20B by 2025 telematics to reach $55B by 2021
1H17)
Startups Boost Insurance, REIN, Qover, Jupiter Intelligence, Climacell, Carpe Data, Datacubes, Planck CyberCube, Cyence Zendrive, Samara, Octo, Mobileye,
Slice, Sure Understory Weather Re, Digital Fineprint (Guidewire), Corax, Cyberwrite Nauto
Notable investors
Partnerships
Others: XL Catlin, Progressive, and Others: Pacific Specialty with Others: Zurich Insurance and Others: Munich Re with Mobileye,
Legal & General, The Co-operators Understory Weather AGCS with Cyence EMC Insurance with Octo
with Slice, Chubb with Sure
1Note: year-over-year (yoy) reflects Q1’18-Q2’18 vs. Q1’17-Q2’17 41High
TRANSITORY NECESSARY
• Corporate interest and adoption • Widespread industry and customer
adoption and investments
• Uncertainty about size of
market opportunity • Market and applications
NExTT
are understood
INDUSTRY ADOPTION
EXPERIMENTAL THREATENING
Framework
• No widespread adoption beyond • Large addressable market forecasts
pilots or early-stage companies
• Notable investment activity
• Early adopter-driven tech & trends
• Patchy/uncertain adoption
Low
Low MARKET STRENGTH High
42The NExTT framework’s 2 dimensions
Industry Adoption (y axis) Market Strength (x axis)
Signals include: Signals include:
momentum of startups market sizing forecasts earnings transcript
in the space commentary
media attention quality and number of competitive intensity
investors and capital
customer adoption investments in R&D incumbent deal making
(partnerships, customer, (M&A, strategic investments)
licensing deals)
43High
TRANSITORY
Trends seeing adoption but where there
NECESSARY
Trends which are seeing widespread
NExTT Trends
is uncertainty about market opportunity. industry and customer implementation /
adoption and where market and
We evaluate each of these trends using
As Transitory trends become more applications are understood. the CB Insights NExTT framework.
broadly understood, they may reveal
additional opportunities and markets For these trends, incumbents should The NExTT framework educates businesses about
that spur resources being deployed have a clear, articulated strategy and
emerging trends and guides their decisions in
INDUSTRY ADOPTION
towards them. initiatives.
accordance with their comfort with risk.
NExTT uses data-driven signals to evaluate technology,
product, and business model trends from conception to
maturity to broad adoption.
EXPERIMENTAL THREATENING
The NExTT framework’s 2 dimensions:
Conceptual or early stage trends with Large addressable market forecasts and
few functional products and which have notable investment activity. ● INDUSTRY ADOPTION (y axis)
not seen widespread adoption.
The trend has been embraced by early Signals include momentum of startups in the space,
Media interest and proof-of-concepts are adopters and may be on the precipice of media attention, customer adoption (partnerships,
spurred by the potential of trends. gaining widespread industry or customer customer, licensing deals).
adoption.
● MARKET STRENGTH (x axis)
Signals include market sizing forecasts, quality and
Low
number of investors and capital, investments in R&D,
earnings transcript commentary, competitive
Low MARKET STRENGTH High intensity, incumbent deal making (M&A, strategic
investments).
44High
EMERGING TRENDS IN P&C INSURANCE
TRANSITORY NECESSARY
NExTT framework
Underwriting & risk selection
Conversational Virtual auto claims
AI
Smartphone UBI Product design & distribution
Geospatial analytics
INDUSTRY ADOPTION
Drone inspections
Customer engagement
Insurtech-as-a-service Robotic process automation
Claims management & prevention
Commercial data augmentation
Commercial data automation
Cyber risk analytics
Hyperlocal weather analytics Smart home sensors
Embedded home insurance
Workplace wearables
Low
EXPERIMENTAL THREATENING
Low MARKET STRENGTH High
45You can also read
