How will look the new IoT based paradigm? Real Time, Fact-Based and Digital Claims

1. May 22th 2018
Reaching the New
Connected Claims Paradigm
Matteo Carbone
Founder and Director, IoT Insurance Observatory
@mcins_

2. 2
All the insurance players will be InsurTech
It’s unthinkable for an insurance
company today not to pose the question of
how to evolve its own model by thinking of
which modules within their value chain
should be transformed or reinvented
via technology and data usage
I believe all the players in the
insurance arena will be InsurTech,
meaning organizations where technology
will prevail as the key enabler of the
achievement of their strategic goals

3. 3
InsurTech is the “superpower” fot the core insurer’s activities (to
assess, manage and transfer risks)
Telematics is
the perfect
InsurTech
example

4. 4
Most of you think that UBI has failed in the US
Leave-in
Roll-over
8 M telematics policies
at the end of ‘17
4.4 M cars connected
with an Insurer in ‘17
(penetration 1.7%)
I agree with you!
More than 30%
smartphone
based
Source: IoT Insurance Observatory
After many years….

5. 5
I’ll show you some telematics secrets, but I have before to ask
you for the next 17 minutes to forget everything you have
heard about it before today
Because telematics is an
extremely powerful technology
able to transform your journey…
…but you have seen it used only
to go to the market
at the end of the street

6. 6
I love insurance
Matteo Carbone
Founder and Director of the IoT
Insurance Observatory
InsurTech Investor and co-founder of
Archimede ($55M funding)
+11 years strategic consulting
(former Principal with Bain & co.)
Keynote speaker and writer on
insurance innovation
Global InsurTech Influencer
• This Insurance think tank has aggregated more
than 40 international insurance groups,
institutions and tech firms between Europe and
North America
• The initiative has three concrete outcomes:
‒ The most pragmatic multiclient research
specialized in the insurance IoT domain
‒ One-to-one workshops dedicated to each
member to discuss research outcomes
‒ Plenary symposiums with all the members
together around the same table
I’m helping incumbents to concretely address the IoT opportunity

7. 7
The most pragmatic
multiclient research
specialized in the
insurance IoT domain
One-to-one workshops
dedicated to each member
to discuss the research
outcomes
Plenary symposiums
with all the members
together around the
same table
I have created a think tank which provides the members access
to the most relevant insurance IoT knowledge globally

8. 8
In 2017, I had more than 350 hours of discussions with the
Observatory members around the globe
Think Tanks
One focused on the
North American markets and
one dedicated to the
European markets
2
Organizations
Involved hundreds of executives
from almost 35 Insurance and
Reinsurance Groups and 15 Tech
players and Institutions
50
Plenary meetings
6 full days of keynote
speeches, discussions,
roundtable.
A terrific networking
opportunity
6
Hours of workshop
More than 120 "one to
one" workshops
(meetings dedicated to
each company which has
joined the Observatory)
>350
4
Business insurance areas addressed
Unique research based on innovation
thought leadership and insurance acumen
on all insurance business lines

9. 9
In these years, I have worked with players accounting for
70% of international telematics volumes
Today there are more than 13M cars connected with an insurer

10. 10
Some insurers on the Italian market have found an effective way
to use telematics data and they have driven the market growth
2012
2017
ITALY US UK
7.1 M connected
cars on ‘17
4.4 M connected
cars on ‘17
1,1 M connected
cars on ‘17
Source: IoT Insurance Observatory estimates
Leave-in
Roll-over

11. 11
What kind of product has generate this success?
* Adjustment of the discount based on mileage at the renewal
Blackbox to be installed on
top of the battery for the
entire year (self-installing)
Auto liability insurance
coverage with 20% up-
front flat discount*
Platform of services with a
50€ annual fee charged to
the customer
Telematics device Insurance coverage Services

12. 12
Traditional
bottom line
Service fees
paid by the
customer
Hardware
TSP
Telematics
costs
Many insurers was able to leverage the telematics data to create
value
50€ annual
fee

13. 13
Enhanced the drivers’ journey and improved their customer
experience with a suite of services, with a strong focus on
“crash moment”
Source: Connected Insurance Observatory
NOT EXAUSTIVE
Automatic assistance
to the client on the
premises in case
of severe accident
Simplified claim notification,
including automatic form fill-in
based on telematics data
Claim certification
at client’s disposal
Short-time
theft cover
Parking
localization
Alert in case the vehicle is
moved when the engine is
off (e.g. tow-away)
Car’s hearth
rate monitoring
789101112
Antitheft service if the box
is removed/uninstalled
While
Driving
In case of
crash
When
parked
Weather alert based on
geo-localization
2
Alert in case speed
limits are exceeded
1
Highway/parking area
tolling
3
Road or medical assistance via
dedicated button
4
Client assistance and
personalized case
management in case
of crash
5
6
13
Bodyguard for emergency
outside the car when parked
Stolen
vehicle
recovery
Alert if the car is
hit when parked
14
15
16

14. 14
Traditional
bottom line
Risk self
selection
Service fees
paid by the
customer
Hardware
TSP
Telematics
costs
Many insurers was able to leverage the telematics data to create
value
Even if two customers seem to be
equal based on their characteristics.
The one who accepts the telematics
value proposition is less risky

15. 15
Self-selected risks due to product features
This auto telematics
value proposition
focused on crash
monitoring shows a
terrific effect on the
acquisition of low
risk clients
Market
average
(20%)
Claims frequency (district average)
Black box effect
on
claims frequency
(risk adjusted)
Black box impact by district
Market
average
-20%
3.0 6.0 6.5%Market
average
4,8%
4.5
REAL CASE

16. 16
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service fees
paid by the
customer
Hardware
TSP
Telematics
costs
Many insurers was able to leverage the telematics data to create
value

17. 17
As you know, claim cost is the big elephant in the room
Insurer’s preferred
body shop usage
+100%
Sources: IoT Insurance Observatory best practices
Settlement speed
+5%
Material damage
costs
-11%
Body injury
incidence
-18%
REAL CASES

18. 18
How does their connected claims paradigm look?
Fact-based Digital Real-time

19. 19
Telematics data is the foundation of the
new claim process
10:40
05/22
10:43
10:47
11:40 13:00
05/23
…
Automatic
assistance
First contact with the
client, start of claim
management and
responsibility definition
Adjuster operation in the more
convenient preferred body shop
(geo-located)
Prompt definition of
the exposure
Digital customer interactions
and claim tracking
Eventual medial
visits
ILLUSTRATIVE
…
Adjudication and negotiation
leveraging the objective
information obtained form
the telematics data
Settlement and payment$$$

20. 20
Enhanced the effectiveness of the claim evaluation
and the efficiency of the claim process
Who here, thinks that this is
a tool which will bring
benefits to your claim
handlers’ activities?
Please raise your hand
Photo credit: UnipolSai
REAL CASE

21. 21
Each architecture element must be coherent to create this value
•User experience
- Customer user experience
- Connected Insurance ecosystem
- Based on data collected, offering of additional value-added
services to the customer
• Insurance smart actions
- Insurer's "on air" actions such as billing, claims management,
cross selling
•Insurance advance analytics
- Insurer's "batch" knowledge creation (risk models, claims
knowledge, …) based on the data analysis
•Data analysis/preparation for insurance needs
- Normalization, analysis, interpretation of collected telematics
raw data for insurance purposes
•IoT data collection and data sources management .
- Collection of recorded data from front-end device and
transmission of raw data to cloud
•Sensors design/ manufacturing
- Manufacturing of various front-end devices and apps
6
5b5b
4
3
2
1
5a5a
INSURANCE IOT ARCHITECTURE
User experience (UX)
Sensors design/ manufacturing
IoT data collection
and data sources management .
Data analysis/
preparation for
insurance needs
3
6
2
1
Insurance
Advance
analytics
4
Connected
insurance
ecosystem
(VAS)
5b
Insurance
smart actions
5a

22. 22
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service fees
paid by the
customer
Bottom line
with telematics
Hardware
TSP
Telematics
costs
Discount
to the
costumer
Value
sharing
Many insurers was able to leverage the telematics data to create
value
Discount is a way to share with customers part of the value created
in order to increase the attractiveness ot the value propositions
20% up-front
flat discount

23. 23
I believe (some) insurers will succeed in the connected car war
and they will stay relevant in the life of their clients
Each of you can be one of these successful insurers!
They will orchestrate their own connected
insurance platform using data to create value
and share this value with the customer to
deliver superior value propositions
The way they will create value is
by activating many different use
cases on the entire insurance
value chain
Value sharing
Connected
insurance
pardigm

24. 24
I’m supporting this evolution through the Observatory
Objectives
Scouting and rationalizing
qualitative/quantitative
knowledge on Insurance IoT
Sharing a critical point of view of
key trends and spreading
innovation culture
Encouraging members to discuss
experiences and exchange ideas
about innovation
The scope
Any insurance solution based on sensors for collecting data on the state of an insured
risk and telematics for remote transmission and management of the data collected
Health
and life
Industrial risks and
workers’ comp
Auto… Home and
commercial property

25. 25
I’m proud when I see members of the Observatory who move
to the execution phase

26. 26
One member of the European Observatory has changed its
telematics offer aligning the product to the best practices
Dic '15 Dic '16 Dic '17
75% of the new auto insurance
business has been telematics based
Penetration on their own auto
insurance book is almost at 30%
Telematics portfolio have grown
4X in 24 months

27. 27
I’m extremely proud to serve these 18 Prestigious Organizations
with the North American IoT insurance Observatory
To join the Observatory feel free to write to matteo.carbone@iotinsobs.com