Insurance 2020 & Beyond “Transformación del Sector Asegurador,

Insurance 2020 & Beyond
México
November, 2015
By. Stephen T. O’Hearn
Leader of the PwC Global Insurance Practice
“Transformación del Sector Asegurador,
más allá de la Regulación”
Research assessed 32 distinct drivers of change
Social
Customer Behaviors
– Social Networking
– Customer Expectations
– Risk Awareness
– Health
Talent Drain
– Dynamics of the Middle
Class
– New Family Structure
– Dependency Ratio
– Aging
Urbanization
New Growth Opportunities
Fiscal Pressure
Inflation/Deflation
Risk Sharing & Transfer
Stakeholder Trust
Social Security & Benefits
Corporate Social Responsibility
Distributor Shift
Partnerships
Technology
Information & Analytics
Environmental
Climate Change & Catastrophes
Sustainability
Political
Pollution
Devices & Sensors
Regulatory Reform
Software & Applications
Geo-political Risk
Rise of State-Directed Capitalism
Medical Advances
PwC
Economic
Demographic Shifts
Terrorism
Tax Treatment
Sharia Compliance
(Takaful)
2
The implications of these trends are altering the way insurers compete
Social
The balance of power is shifting towards customers
Technological
Advances in software & hardware are transforming ‘big data’ into actionable insights
Environmental
Increasing severity and frequency of catastrophic events are giving rise to more
sophisticated risk models & risk transfer
Economic
The rise of economic and political power in emerging markets
Political
There is harmonization, standardization and globalization of the insurance market
PwC
3
The insurance industry is undergoing more upheaval than any
other industry
Changes in industry
regulation
88%
Changes in customer
behaviors
71%
Changes in distribution
channels
69%
Increase in number of
significant competitors
traditional and new
Changes in core
technologies of production
or service provision
Source: PwC18th Annual Global CEO Survey
PwC
66%
61%
50%
64%
Q: How disruptive do
61%
you think the following
trends will be for your
industry over the next
five years? Respondents
stating very or somewhat
disruptive
61%
47%
Insurance
All Industries
4
Insurance executives are preparing to navigate a market filled with
nearly an equal amount of opportunities and threats
59%
of insurance CEOs believe
there are more growth
opportunities than there were
three years ago
61%
of insurance CEOs
see more threats
than they did in 2012
Source: PwC 18th Annual Global CEO Survey
Sources: PwC 18th Annual Global CEO Survey
PwC
5
The Insurance 2020 Agenda
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
6
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
7
The Backbook
Distress caused by low interest rates
• A challenge for general insurers
• A crisis for life insurers
PwC
8
The Backbook
Levers:
Product strategies
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9
The Backbook
Average guaranteed rate of life insurance:
2009
2010
2011
2012
2013
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
0%-1%
PwC
1%-2%
2%-3%
3%-4%
4%-5%
>5%
10
The Backbook
Levers:
Product strategies
Conversion strategies
Investment strategies
M+A strategies
Cost strategies
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11
The Backbook
CEO Survey:
Which of the following restructuring activities do you plan to initiate in
the coming 12 months?
Global
Outsource a business
process or function
43%
Implement a cost
reduction initiative
59%
PwC
12
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
13
Innovation
Digital: a sharper focus on the customer
PwC
14
Innovation
New and different types of expectations & behaviors are here to stay…
PwC
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15
Innovation
6yr olds show the same confidence with technology as 45yr olds
Digital Quotient
PwC
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16
Innovation
Technology is enabling disruption of other industries
World’s most popular
media owner creates
no content
World’s most
valuable retailer has
no stock
Demographic
shifts
PwC
World’s largest
accommodation
provider owns
no real estate
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
World’s largest
taxi company
has no cars
17
Innovation
70%
of Insurance CEO´s see
technology/customer behavior change as
disruptive to their business model – more
than any other industry.
Global CEO Survey January, 2015
PwC
18
Innovation
CEO Survey:
How likely is it that your Insurance company will face competition
from non-FS companies in next 3 years?
Global
PwC
Quite likely
39%
Very likely
32%
19
Innovation
New entrants gaining stronghold of large consumer groups
“ (…) the key to
insurance is having
lots of data about
people’s
backgrounds and
habits, which is
perhaps the
company’s [Google]
greatest strength.”
New York Times, Jan 18, 2015
PwC
20
Innovation
The eCommerce player Alibaba is transforming the Chinese market and innovating in financial
services and insurance
Three companies joined together to launch…
Alibaba
Tencent
Ping An
...Zhong An - the first online insurance
company in China
PwC
21
Innovation
New entrants in the robo-advisor space are developing new models of assisted and
automated omni-channel education and advice
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22
Innovation
B2C experience are driving B2B expectations
B2C
B2B
Streamlined Shopping
Anywhere Access
Information Transparency
Sharing & Coordination
Social Enablement & Connection
Multi-channel Support
Productivity & Savings
PwC
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
23
Innovation
Models to take ideas forward
Innovation Hub
Insurer as Venture Capitalist
Company funding of externally
sourced ideas and experimentation
Company SMEs internally interate new
ideas
Outlet for Venture Capitalists
Incubator
Company expert panel hears pitches
and invests and experiments
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Company experimentation of Venture
Capitalist funded ideas
24
Innovation
Data Analytics:
Was a system challenge – now a race for talent
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25
Innovation
One Company’s 4 behavioral segments
1. Sustainers
Older, Financially
Comfortable, Trust
Advisors to Make
Decisions
Age: 55+
Income: $130k
Savings: $370k
PwC
2. Builders
Younger, Confident,
Prefers Direct
Channel
Age: < 40
Income: $130k
Savings: $280k
3. Strugglers
4. Consolidators
Middle Aged, Worried,
Relies on Advisor
Approaching
Retirement,
Financially Confident,
Active Decisionmakers
Age:40 – 54
Income: $100k
Savings: $160k
Age:45 – 64
Income: $120k
Savings: $280k
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Innovation
The market potential for their chosen focus
Total $$ Potential - DD
Tapped & Untapped
Market
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27
Innovation
Data Analytics is transitioning the insurer
from a reactive claims payer to a preventative
risk advisor
28
Innovation
67%
Of consumers
would be willing
to have a sensor
attached to their
home or car if
doing so would
lower their
premiums
29
Innovation
Sensors are also allowing insurers to monitor health, deliver personalized underwriting and
change customer behavior
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30
Innovation
Control the Data
Trust the Data
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31
Innovation
Andreesen Horowitz shares the 16 tech trends it’s most excited about:
Sensorification
of the
Enterprise
Machine
Learning
+ Big Data
The Full-Stack
Start-up
Containers
Digital Health
Online
Marketplaces
Security
Bitcoin (and
Blockchain)
Cloud-Client
Computing
Crowd Funding
Internet
of Things
Virtual
Reality
Online Video
‘Failure’
DevOps
Insurance
•
Relationship
Management
•
Risk
Management
Source: http://a16z.com/2015/01/22/16-things/
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32
Innovation
Leading 2020 CEO’s:
• Out front, not delegating.
• Articulating a clear strategy.
• Digitally literate.
• Endorsing experimenting.
PwC
33
You don’t need a digital strategy…
You need a business strategy fit for the
digital age
PwC
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34
A new kind
of digital
insurer.
PwC
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Image credit | Jessie35
Edwards
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
36
Growth
CEO Survey:
How confident are you about your Company’s prospects for growth?
Global
PwC
“Very Confident”
44%
“Somewhat Confident”
41%
37
Growth
Excess capital
creating M+A fever?
Growth
67% of CEO`s see
distribution tie ups
as a significant
opportunity
PwC
38
Growth
CEO Survey:
Plan to enter into a new strategic alliance or joint venture?
“Yes”
Global
45%
Reasons for entry:
Access to customers
66%
Strengthen brand
Increase innovation
33%
31%
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39
Growth
Emerging Markets
• Invest for future
• At what cost?
Growth
Western focus: Seniors
• Retirement income
• Long term care
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40
Growth
Change in population by age group, 2010-30, globally
90%
83%
80%
70%
Change, 2010-30
60%
50%
40%
30%
20%
20%
10%
7%
0%
0-14
PwC
15-64
65+
41
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
42
Regulation
91%
of insurance CEOs see over
regulation as a threat to
their 2020 growth
prospects, more than any
other sector
Sources: PwC 18th Annual Global CEO Survey
PwC
43
Regulation
Capital
PwC
Is the path clearer or murkier?
Conduct
Intervention into distribution: truly changing the
business model, with the potential to reestablish credibility and
confidence in the long term
Directives on personal taxation
Corporate
Taxes
BEPS
Corporate taxes: the number 2 worry in both CEO surveys
behind overregulation
Accounting
IFRS 4/9 requiring finance transformation
Insurance Modernization: a holistic vision of systems,
processes, data requiring a greater alignment of risk, actuarial,
and finance
44
The
Backbook
Innovation
Growth
5 Urgent
Priorities
Regulation
Culture/Behaviors
PwC
45
Culture/Behaviors
With an ambition to speed decision
making processes, Insurance Companies
are focused on creating a culture of
responsibility.
Culture
“how people act
when no one is watching”
PwC
46
It’s what you do
that counts.
Not what you say…
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