Cap Gemini – World insurance Report 2018

world insurance report 2018

Cap Gemini and Efma published their annual report World Insurance Report 2018 last week. This report is usually the occasion for an interesting overview of what is happening on the market. I wrote an article on the 2017 version of this report . What should we remember from this edition?

Highlights of Cap Gemini’s World Insurance Report 2018

Because of the length, the article is separated into 3 pages, for each of the chapters.

If the results of the study provide welcome figures, the content of the World insurance report 2018 is unfortunately very clutter and does not really give proper reading to explain the situation.

Accelerate digital transformation

A necessary catch-up?

world insurance report 2018 Insurance ranks third in the customer experience score ranking ( Note: no explanation is provided on the measurement of this indicator ). This figure looks very good. On the other hand, as soon as one looks at the positive customer experience score, the result deteriorates. This is particularly the case when comparing the results with the banking sector.

world insurance report

It therefore seems clear that insurance needs to catch up on these issues. For example, the report cites the best ability of banks to leverage technology to benefit from customer touch points. ( Note: Certainly, but it is undeniable and well known that insurance has a natural deficit of points of contact with the bank, the stakes are not the same: for the bank to exploit, for insurance generate them … ).

By pushing the analysis on the satisfaction around the essential services, a significant difference appears on the simplicity of use: 36% of satisfied compared to 47% in the bank! The gap is also important in terms of speed of service.

world insurance report 2018

Regional variations

Regional variations exist, especially if we compare the levels of satisfaction between Europe and North America. If the French are eternally dissatisfied, this is not the case for all Europeans. The gap is also important enough to attract attention!

world insurance report 2018

Digital is a lever to break the traditional boundaries of customer interactions

Communication via digital channels is now well integrated, and it is now the mobile that is gaining importance! 40% of respondents believe that a mobile application is an important channel.

world insurance report 2018

Among the arguments invoked, that, classic ease (because common to many other uses of everyday life) and the other newer on personalization and individualized services.
The adoption of digital is an essential factor and opens new horizons for insurance. First, it generates an increase in the number of touch points. This creates new business opportunities. The new services that are associated with these uses are also an opportunity to improve the acquisition and retention of customers.

Proactive

There is room for improvement on the proactivity of insurance offers! Where there is often question of whether the insurance is too much or not enough for its customers, the answer is clear!

world insurance report 2018

Going even further, the proactivity of the insurer has a positive impact on the satisfaction of policyholders [/ inlinetweet].

world insurance report 2018

New challenges as technology advances

There are many examples of GAFA or other large multinational incursion tech in the perimeter of the financial sector. Insurance is one of the recurring targets of Amazon, Apple, Alibaba or Alphabet (Google). This type of competition requires traditional players to change gear to transform themselves by accelerating the pace. Indeed, more and more insureds say they are ready to take out a contract with giant tech. They are 1/5 to position themselves as such in Europe and 1/3 in North America and up to 40% in Asia and 50% in Latin America!

world insurance report 2018

Finally, if security issues are still in everyone’s mind, policyholders are increasingly willing to share their data in exchange for personalized services and additional values.

world insurance report 2018 world insurance report 2018

To conclude, the propensity to switch from a traditional insurer to a tech company can be analyzed from a demographic point of view. Indeed, some groups are more favorable than others (technophiles and generation Y), due to a customer experience deemed insufficient. ( Note: This is the beginning of adoption by early-adopters ) world insurance report 2018

UBS Insurtech Shifting Asia report sept. 2017

UBS insurtech shifting asia

In late 2017, the Chief Investment Officer of UBS published a report “ UBS insurtech Shifting Asia ” (Original landing page here). I propose here a statement of key points, and what to remember.

Key points to remember about UBS insurtech Shifting Asia

  • Asia is one of the least insurance-covered markets and there are huge catch-up prospects
  • Insurtechs have the opportunity to transform this market more than any other. They could generate, for example, up to $ 300 billion in savings by 2025.
  • Competition is tough on the continent and forces to improve the quality of service as well as to find differentiation criteria
  • Customers are going to be the big winners of the arrival of insurtechs.
  • Incentive prevention actions could lead to significant effects on risky portfolios and thus significant improvements for the benefit of society.

Continue reading “UBS Insurtech Shifting Asia report sept. 2017”

Matteo Carbone – 4P’s of insurtechs

4P's of insurtechs

Matteo Carbone is an opinion leader in the insurtech industry today as one of the most prominent on the market. He created the Connected Insurance Observatory, an international working group, first in Europe, then in North America, dedicated to insurtechs. Matteo participates in numerous conferences around the world throughout the year. He unfolds his theory of 4P’s of insurtechs, and I wanted to make a presentation for a long time.

The 4P’s of insurtechs

First of all, you can listen to Matteo Carbone in his presentation at the 2017 Global Insurance Symposium in Des Moines.

You can also find slides at this link, if you are an aficionado of his prose, without listening to his wonderful English accent!

Key points to remember

According to Matteo Carbone, insurtechs can intervene on 4 axes:

  • Productivity : be more efficient
  • Profitability : get a better technical result
  • Proximity : to be closer to the customer and his needs
  • Sustainability of the portfolio (the term it uses is “Persistency” which means persistence over time, and therefore no attrition): Build a profitable portfolio on the long run term, with a small rotation.

In the absence of these objectives, there is no interest in innovating because the solution will not bring anything useful.

Telematics

The second subject addressed in this presentation is telematics, because it is one of the key topics of Matteo Carbone. The Swiss Re report which I was echoing a few months ago is directly worked with him, when it comes to the Italian example.

3 topics to consider:

  • The connected object : often a black box connected to the vehicle
  • Insurance coverage : and the notion of incentive reduction associated with it
  • Associated services : access to a set of additional services that can be provided for a fixed fee.

Under the arguments that telematics allows of itself and of course a selection of the best risks ( Note: it is questionable ) and a better controls of the compensations ( Note: that on the other hand, I share ), he comes to the conclusion that the financial result of the insurer is improved thanks to this technology.

4P's of insurtechs

It is also possible to rework the customer experience on all of its use of the vehicle and the different needs that might be relevant. Note: this aspect is absolutely essential, because it is from the use that one deduces the exploitation that one can make technologies.

4P's of insurtechs

Finally, the figures it presents show that attrition will be lower with telematics than without (11% instead of 14%).

In short, that positive points!

My conclusion

I share a lot of Matteo’s conclusions.

By reading, you will understand that the questions of use and business need interest me first. The 4P’s of insurtechs are a key to reading that is interesting to keep in the lead.

On the Telematics side, I am also convinced of the short / medium term prospects for the subject. I invite you to read again my note on it . Let’s discuss if you want to consider a deployment!

Gras Savoye – Insurance Markets 2018

marchés de l'assurance 2018

The broker Gras Savoye, belonging to the Willis Towers Watson Group, published in september 2017 an interesting economic note on the transformation of the insurance markets 2018. They come back therefore, by business line, on current trends.

Overview

Overall, the French insurance market is rather stable:

  • The world market is down slightly
  • France remains an important market (5th world player), with just over 200 billion euros of premiums
  • Personal insurance accounts for 75% of this figure, and sees a rise in pension premiums
  • Property insurance is subject to strong competition, and is experiencing a significant increase in claims, which affects the underwriting results. This is due in particular to climatic events.

In the details of the 2018 insurance markets

In brief

Given the richness of the report, it is complicated to synthesize it, and I prefer to suggest that you refer to it if necessary. I prefer to present the plan!

insurance markets 2018 insurance markets 2018

Each theme is treated according to 5 axes:

  • Capacity / Appetite
  • Price
  • Deductibles
  • Warranties
  • Flexibility

Some key things to remember

  • 3 alternatives to risk transfer are presented:
    • Structured Insurance: covering the multi-year consequences of new or complex risks. (terrorism, pandemics, strikes, etc.)
    • parametric insurance : or index-based insurance, which i have already talked a lot here
    • Mutli-line / Multi-year approach: which reduces volatility
  • D&O (Executive) policies continue to evolve and adapt to changing risks. The tailor-made is put on this profitable and dynamic market (new regulations, cyber risks, etc. which increase the risks for managers).
  • There is growing interest in combined fraud / cyber collateral, although these mounts do not always yield the best proposals. Note: It is understandable that customers are always looking to hedge against an unknown risk, but perceived as critical .
  • Kidnap & Ransom products are in full swing, because of an international geopolitical context that is sometimes hazardous.

Conclusion: My opinion

This report is a mine of information, very technical, but essential to a good understanding of the complexity of heavy risks. A disadvantage on the bedside table, but imperatively under the elbow!

In hollow, one sees there appear, as often, the insurance products which could be generalized tomorrow. The trends observed, especially on cyber, fraud or regulatory aspects are in this sense good indicators of the future.