1、Cover Title 26/29 45 Light Black Cover Subtitle 12/15 65 Medium Black Quarterly InsurTech Briefing Q4 2017 January 2018 1 Quarterly InsurTech Briefing Introduction Rafal Walkiewicz Global Chief Executive Officer Willis Towers Watson Securities Foreword: The Sobering of InsurTech The fourth edition o

2、f our Quarterly InsurTech Briefing offers an opportunity to reflect on a full years worth of InsurTech activity in 2017 another year of record investment into the space from both financial investors and (re)insurers. 2017 brought a new trend to the industry, which we describe as the The Sobering of

3、InsurTech. Incumbents sent a clear message to potential disruptive outsiders: by investing heavily in start-ups and technology, (re)insurance companies appear to have assumed a semblance of control over the InsurTech revolution. During the year, conversations about disruption of the existing value c

4、hain evolved towards an efficiency-driven search for incremental innovation. However, technology revolutions rarely result in redistribution of power among incumbents. Instead, these developments more often produce an entirely new approach to the value chain that defines winners. Look at Amazon, Tes

5、la and Apple as examples, and consider the markets theyve taken from Walmart, GM, Ford, Kodak, Nokia and others. Insurance may not trace the same trajectory high barriers to entry associated with regulation, product complexity and the value of long- term customer relationships may shield incumbents

6、from large-scale disruption. It is also possible that incumbents collective response to InsurTech hype has diminished their ability to recognize true disruption. Should Incumbents Feel Safe? Our Q4 Industry Theme feature focuses on (re)insurers shaping InsurTech. 65% of incumbent investments to date

7、 have focused on enabling the current value chain, as (re)insurers have attempted to enhance the efficiency of product delivery, underwriting, claims and other administrative functions. It remains to be seen whether enhanced efficiency will drop to the bottom line for incumbents, get delivered to cu

8、stomers or fund third party solution providers, but it is difficult to identify or quantify disruption within incremental innovation resulting from these investments. Less than 10% of InsurTech investments to date have flowed into start-ups targeting full scale value chain disruption. This trend is

9、magnified in the results of our (re)insurer innovation survey, which includes responses from nearly 600 (re)insurance and investment professionals. 75% of respondents believe their company is “moderately” to “extremely” at-risk of disruption, even as 72% of company innovation resources, on average,

10、are devoted to incremental technologies (instead of disruptive or radical ones) and nearly half of respondents describe their companys innovation philosophy as “ad-hoc,” meaning their company is neither explicitly a first mover or a fast follower. Most respondents believe customers and employees are

11、 valuable internal sources of innovation, while only 20-30% recognize and prioritize substantial innovation contributions from external talent pools, such as accelerators/incubators and venture capital. Henry Ford once said, “If Id asked customers what they wanted, they would have told me, A faster

12、horse.” Third party venture capital money in InsurTech is betting on something else. Leading VC fund Andreessen Horowitz sees new technologies differently, stating: “It has to be a radical product. It has to be something where, when people look at it, at first they say, I dont get it, I dont underst

13、and it.” External capital entering the industry is searching for potential unicorns, funding disruptive ideas and breakthrough technologies that may seem crazy at first. New Capital Bets on High-Growth Products Our Transaction Spotlight feature highlights an example of a significant bet on fundament

14、al changes to (re)insurance sourced from outside of the industry. Guidewires $275 million acquisition of Cyence marks a technology companys entrance into an attractive niche market which may represent one of the most compelling growth opportunities in the (re)insurance sector. Today, cyber attacks a

15、re estimated to cost more than $1 trillion per year, more than three times higher than economic losses from natural disasters in 2017, the third most expensive year in history. To date, the (re)insurance industrys response to cyber threats has been mixed; amidst limited product penetration due to a

16、lack of experience data, global cyber premium is estimated at just $3 billion in 2017, though selected incumbents are working hard to advance their cyber products, modeling capabilities and underwriting and claims handling infrastructure. It is interesting that one of the leading cyber risk modeling

17、 firms has been acquired by a technology vendor, and not a (re)insurer. Quarterly InsurTech Briefing Introduction Quarterly InsurTech Briefing Q4 2017 2 Transformative Value Incremental Value Market Focus User Focus New Products Sompo invested with aim of introducing product in Japan 16Health IQ81.6

18、Andreessen Horowitz CRV First Round Capital Foundation Capital Greylock Partners Menlo Ventures Rock Health Western Tech Investment Undisclosed Investors Mobile life insurance underwriting platform that aims to provide customized coverage solutions Offers plans that can be tailored to different diet

19、ary and lifestyle choices, avoiding penalties that would apply to certain customers under traditional coverages Ongoing partnerships with Lincoln Financial, Brighthouse Financial, Transamerica, Berkshire Hathaway, Securian, SBLI, Manulife, Assurity, Prudential, Principal, Ameritas and others 17GetIn

20、sured78.3Bessemer Ventures Noro-Moseley Partech Ventures River Street Mgmt. Trinity Ventures Vocap Investments Undisclosed Investors Integrated online comparison shopping portal for small business and family health coverages Licensed to operate in 50 states with 1.5 million customers enrolled in Get

21、Insureds online platform Offers coverages from Aetna, Anthem, Blue Cross Blue Shield, Humana, Kaiser Permanente and others Q4 2017 Industry Theme The Sobering of InsurTech: Adapting Business Models for Incumbents Product for those insureds, theyll buy online. However, they typically cancel their ins

22、urance frequently and fall into the category of non-standard insureds. Then theres the other category of consumers seeking to protect their wealth from risk; that category, while migrating towards online purchasing is not comfortable deciding what to buy. Consequently, theres a need for a better use

23、r experience, as well as offline agents advising the customer on how best to protect their risk. We believe this dichotomy is not going away any time soon. While its possible, in the future, that A.I. and predictive analytics will improve this process, people will still want to know that theyre prop

24、erly covered. Goji lives to address this complexity. We spend an enormous amount of time on user experience, as well as analytics necessary to make sure that the customer can get the highest quality product at an affordable price. Gojis Executive Chairman since mid-2016 Manages Coffin Capital we bel

25、ieve that the reality is somewhere in-between. While the world is evolving whereby online and offline markets are converging, preferred consumers seeking insurance are going to need both for the foreseeable future. Weve found that the preferred customer demands more than whats typically offered by o

26、nline comparison shopping sites. While price is always important, coverage features, personalized advice from licensed agents and analytics tend to be the driver of Gojis relationship with its customers. This consultative approach serves the customer well and leads to maintaining long-term customer

27、relationships that are more focused on coverage than solely on price. Goji has amassed a robust customer database generated from millions of historic customer interactions, enabling it to formulaically filter and identify high-value online customers, which becomes increasingly accurate with more use

28、r data. Goji acquires customers through a differentiated and high ROI strategy. Furthermore, Gojis fully integrated, end-to-end technology platform was developed over several years of investment. Goji also recently rolled out a new model, which enables it to evaluate prospects on a real-time, granul

29、ar basis before introducing them to its program. The technology is allowing us to separate buyers from window shoppers and other online consumers. I approach the company from an omnichannel perspective, involving distribution via direct-to-customer, affinity groups and B2B partnerships, among other

30、paths. Goji can ultimately fulfill for carriers based on their specific appetite, as their distribution partner, by parsing customers into granular buckets and running highly targeted customer acquisition campaigns to address partners specific preferences related to certain customers attributes and

31、profiles. Ultimately, Goji can acquire customers more economically than its partners, leading carrier partners to outsource to Goji, which becomes a win-win proposition. What are the key market trends driving Gojis growth? From an economic perspective, home and auto insurance are needed in both good

32、 and bad economic times, which insulates Gojis business from the economy, while population growth and housing formation will continue to grow the size of the US insurance market. The current climate has resulted in price instability, which has pushed a lot of people into the market to seek out easie

33、r alternatives for cost-effective coverage. Following recent hurricanes, insurance carriers in core markets like Houston have experienced significant losses, resulting in customers facing price increases and cancellations for reasons that having nothing to do with individual losses or characteristic

34、s. Our analytics team identifies niche trends where market dislocations lead to unjustifiably higher prices for certain demographics, in an attempt for carriers to balance their books. Were able to utilize our proprietary algorithms to identify attractive customers who have fallen victim to market f

35、orces, offering customers better and cheaper product options while offering carriers the opportunity to expand in certain markets, as other carriers suffer CAT-related losses. How do you expect the landscape of digital distribution competitors to change over the next several years? Consumer auto and

36、 home insurance represents over $260 billion in annual written premium in the US alone and we do not view online consumer insurance as a winner take all market. From a technological perspective, under 5% of consumer insurance purchases are made online today, compared to 38% for consumer travel, posi

37、tioning Goji well for a secular shift online, which is currently in the early innings. However, unlike consumer travel, insurance is far more complicated. Wed like to believe that no one really is our competition; however, there are other players who report to play in our space. There are new entran

38、ts who are online insurance distribution players that believe customers are capable of buying online without any human intervention; in those cases where they do, they tend to attract non-standard customers, which are less complex to underwrite but are typically higher risk and generate lower ROls.

39、They also typically only offer teaser price quotes and dont actually write insurance, instead simply connecting with a customer and then passing that customer in the form of a lead to another company who tries to write the insurance. However, were not big fans of tech gimmicks solely designed to mar

40、ket to online consumers; instead, were focused on offering high value products to high lifetime value customers, ensuring that they get the right coverage at the best price. Certain new-entrants competing online are also insurance carriers, therefore only offering one product and compete directly wi

41、th insurance carrier incumbents, whereas Goji is not an insurance carrier (and does not retain any insurance risk) and offers customers options across its integrated carrier partner network. While the insurance industry is beginning to shift online and offer customers a better experience, Goji uniqu

42、ely offers customers the ability to do business with us however the customer wants to do so. Quarterly InsurTech Briefing Q4 2017 14 Q4 2017 Industry Theme The Sobering of InsurTech: Adapting Business Models for Incumbents Pioneering Digital Life Insurance: The First and Only Independent Digital Lif

43、e Insurer in South Korea Founded in December 2013, Kyobo Lifeplanet (“Lifeplanet”) is the first, largest and only independent entity in South Korea engaged in online life insurance. The current shareholders are Kyobo Life Insurance, the third largest life insurer in Korea, and Lifenet Insurance, the

44、 first online life insurer in Japan founded in 2006. The company is free from legacy complications in Korea (e.g. high guaranteed rates portfolio, channel conflicts, etc.) and enjoys a structural advantage over more established traditional players. All other digital life insurance platforms operate

45、as a business unit within bigger traditional players with sales models that manage a combination of incumbent agency and direct marketing or both. Lifeplanet has grown rapidly to become a market leader in the online direct life insurance industry as of Q1 2017 with a market share of 36.9% by first p

46、remium (defined as premium received at the inception of a new insurance policy), according to data from Korea Life Insurance Association (KLIA). Driven by an evolving landscape and increasing competitive pressures, domestic retail banks are increasingly focusing on investments in financial technolog

47、y to retain and attract customers. The recent success achieved by the countrys internet-only banks (K-Bank and Kakaobank) reflect growing consumer demand for financial convenience. However, despite the robust growth of fintech in the retail banking sector, online sales in the life insurance sector r

48、emain relatively low. But as demand for simple, straightforward and more affordable life insurance products grows, the online life insurance market is forecast to achieve robust growth. By 2023, online life insurance sales are expected to grow to 6.8% of total insurance sales by number of new contra

49、cts, compared to 1.5% in 2016. By combining big data and AI technology with a seamless user experience, Lifeplanet aims to revolutionize the way life insurance products are sold. Being the first mobile- based life insurer in South Korea, the company offers a streamlined application process through its state-of- the-art digital platform enabling customers to complete the entire subscription process quickly, either through an internet portal or directly via mobile devices. Overall customer experience is further enhanced through a chatbot function, a straightforward p