© Oliver Wyman

INSURTECH IS HAPPENING: ARE YOU Matthew Leonardmatthew.leonard@oliverwyman.comPresentation to the Federal Advisory Committee on Insurance MAY 10, 2018
CONFIDENTIALITY Our clients’ industries are extremely competitive, and the maintenance of confidentiality with 

data is critical. Oliver Wyman rigorously applies internal confidentiality practices to protect thinformation.Similarly, our industry is very competitive. We view our approaches and insights as proprietaprotect our interests in our proposals, presentations, methodologies and analytical techniquethis material be shared with any third party without the prior written consent of Oliver Wyman© Oliver Wyman
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Speaker introduction• Matt Leonard is a partner and Chicago Office Leader at Oliver Wyman and is a membe

Insurance and Corporate Finance & Advisory practices. He co-leads the firm’s insurtecbeen a keynote speaker at InsureTech Connect, the world’s largest gathering of insur

innovators.

• Over his roughly 20-year career, Matt has worked with major financial institutions and in

North America, and Asia involving a range of topics, including market strategy, public pdesign and financial effectiveness.

• Matt has co-authored a number of Oliver Wyman publications. Examples include: “The 

Price Comparison is Poised to Change US Personal Insurance”; “The Implications of FReform for the Insurance Industry” a joint study with IIF; and “The New Bull Market in Rthe Future of Corporate P&C Insurance”. He is also a regular contributor to Oliver Wym

• Matt, who has an MBA from the University of California at Berkeley and a bachelor’s de

Administration from the University of Wisconsin-Madison, joined Oliver Wyman in Londafter several years to the firm’s Chicago office. Prior to joining Oliver Wyman, Matt’s proincludes seven years in the commercial P&C insurance industry.
1 The backdrop
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Insurance plays an important role in society

Controls losses

Pools risk across groupsProvides credit intermediationSignals inherent risk

Enables risk-taking
© Oliver Wyman 

With USD ~$5.1 TR in global premiums, insurance is a large g

APAAmEMEWor

40%60%80%

100%

20%

0%

1%

2%

13%%

Life1

16%% 22%%

1%

0%

2%

11%%

35%%

2%

4%

44%%

1%

Personal Accident & Health

68%%

2%%

1,283 (25.1%)

4%

2,379 (46.4%) 1,460 (28.5%)

0%

21%%19%% 1%

Non-Life

2%

8%%

21%%

1. Life includes protection, investment and annuitiesSource: AXCO database, 2016 figures

Global written premiums in insurance2016, US$ BN
© Oliver Wyman 

Premium dollars divided across claims payments, producing athe product and accessing customers

15151060

100

5075

0

25 Operations ex loss adjustment

Distribution

100

Loss adjustment cost

P&C

Losses

6.5

100

755025

0

100

5,0

85

2,5

Life1 2

Idealized allocation of premium to value chain elements1

1. Illustrative split shown orientated on mature markets – emerging markets might deviate materially2. Life includes protection, investment and annuitiesSource: Oliver Wyman, Policen Direkt

1,0
© Oliver Wyman 

Technology is enabling the insuranto better serve clients...

The world is changing rapidly...

A broad set of trends – and “collision” of trends – will reshape 

Technology & dataSocietalBehavioral

Conversational AI

S

Computer Vision

Robotics and Drones

Blockchain G
© Oliver Wyman 

Trends: Technology and interconnectivity are changing cbusiness models

of cars will be 

connected by 2020

90%

percent of jobs in the US that are 

“at risk” of being automated in 

the next 10–20 years

47%

of the wo

partici

eco

Source: Oxford, Gartner, Forbes
© Oliver Wyman 

Trend: The risk profile and liability associated with technoinnovation remains unclear as regulatory standards lag pinnovation

Sharing Economy

Societal impact

Velocity (10 year horizon)

Consumer wearables

Connected homes

Smart utilities

Drones

Smart parking 

Driverless cars

Data privacy risk Safety r

ArtificIntelliand R

Source: Oliver Wyman, World Economic Forum1. Covers a large group of technologies including softbots (e.g., IBM Watson), prostheses/exoskeletons, and industrial robots. Drones and self-driving cars robotics
© Oliver Wyman 

How will the insurance sector create value in the future?

Getting closer to the 

customer

Shifting from balance-sheet 

to services-led

Un

101100
2 The insurtech landscape
© Oliver Wyman 

Insurtech is now a mainstream theme within the (venture) invecommunity Segment funding as a percentage of overall US fintech investment in March 2018

Insura

technolo

Financial media and 

data solutions 19.1

Digital lending 9.3

Payments 8.7

Investment and 

capital markets 

technology 4.9

Banking technology 3.2

Source: S&P Global Market Intelligence
© Oliver Wyman 

0.87

0.27 0.35

0.14

1.24 1.29

0.40

0.93

0.02.12.80.71.4

2013 2016 2014

1.69

2015

2.67

0.50

2011 2012 

Insurtech investment growing through timeSource: CBInsights, Oliver Wyman analysis

Number of deals Amount

AmountUS$ B

Zhong An

Zenefits Oscar
© Oliver Wyman 

SFO

Brazil

UK

Israel

Germany

India

Canada

NYC

Relative size 

40%

4%

20% <5%

<5%

6% 5%

5%

Source: CB Insights

XX%

Insurtech innovation is a global phenomenon
© Oliver Wyman 

Insurtech activity spans a wide range of business model categSource: Oliver Wyman, Policen Direkt
© Oliver Wyman 

AMERICAS EMEA APAC• BrixLi• Figo Pet Insurance • Ladder Life• Sonnet• Veracity Insurance Solutions

• Bikmo• Fibur• Hellas Direct• mypension • Nalo

• Edire• Fran

• ClickQuoteSave• HealthCare.com• insuranceLevel• TuSeguro.com

• Check24• Comparadise Groupe • Samlino.dk• Ucompare.ie

• Easy• GoB• GoIn• OOH• Polic

• Matic • click2sure

• Simplesurance

• Cov

• Benesnap • Endeavor Plus• Hixme• Zane benefits• Zenefits

• Heaven HR• Hibob• Wealth Wizards

• Ben• CXA• Emp• Hea• Sma

• Covera• Minuto Seguros • PolicyGenius • Quotacy • Tacerto

• Clark• Coverfy • Coverlife• Fluo• WeFox

• Cek• Cov• Insu• Inzu• She

• Bunker• CoverWallet• Embroker• Trym • Zensurance

• Finanzchef24• SOBRADO• Virtual Broker• Worry + Peace

• Insg• She

• Albert• Credit Karma• GuiaBolso• Mint.com• NerdWallet

• Moneymeets • MyFeelix • Octobank• Rentablo• Treefin

• Bam

• byeo • Cake• DocuHome• Everplans • HomeZada• LegacyShield

• AssetVault• Cbien• Planned Departure • SafeBeyond

DistributionInternational comparison of activities worldwide

1

2

3

5

6

7

8

Source: Oliver Wyman, Policen Direkt

4

DISTRIBUTION 42%

High 

LEVEL OF INSURTECH ACTIVITY
© Oliver Wyman 

AMERICAS EMEA APAC• Benefix• BenRevo• Brokerlift• Insurr• LeadCloud• Zipari

• B2b Protect• Covomo• Gewerbeversicherung24• WeSavvy

• Ancil• Aure• Polic• Seas

• Lumiata• Praedicat• Tyche• Vivametrica

• Atidot• Covi Analytics• Cytora• getmeIns• InsureMyTrans• QuanTemplate

• Cheb

• Megalodon Insurance Systems• Gain Compliance• Pokitdok• RedOwl• RiskMatch• TriplePoint Software

• Fortifier• IBA• NuvaLaw• Qumram

• Gen.

• Airwave• Groundspeed• PRXControl Solutions• Snapsheet

• Cognotekt• Nexar• RightIndem• Shift Technology• Tractable• Unfallfuchs

• Claim• Medi• Stas• Wav

• Analyze Re• Isaac Re• Ledger Investing• Rewire

• Budget Insight • Aude

2

3

4

5

1

Source: Oliver Wyman, Policen Direkt

OPERATIONS 39%

OperationsInternational comparison of activities worldwide

High 

LEVEL OF INSURTECH ACTIVITY
© Oliver Wyman 

PropositionInternational comparison of activities worldwide

PROPOSITION 19%

Source: Oliver Wyman, Policen Direkt

2

3

4

5

6

1

AMERICAS EMEA APAC• Health IQ• Melody Health Insurance • Square One • Swyfft

• Alan• Bima• Element• Firstcarquote • Jamii• Karlsson

• Zhon

• Metromile• Slice• Sure• Trov• Verifly • Zensure

• Cuvva• Drivy • Hepster • Ingenie • KASKO• Marmalade

• Bigin

• Gather• Insureapeer • Lemonade• RiskPool• Sharely.us • World Cover

• Cycle Syndicate • Darwinsurance• Guevera• Inspeer • MaTontine• Prvni Klubova

• Band• peerc• Princ• Team• Zhon

• Bright Health • Climate Corp • Clover Health• Fuzzy • Oscar• splitsecnd

• Carrot Insurance• Climate secure• In My Bag • OTTOnova• Schadenengel

• Carm• OKC

• CelsiusPro• Getsurance• Inxure.me• TikkR

• Cloudsurance• CyberPolicy • Y-Risk • Digital Risks • PDX Technology

High 

LEVEL OF INSURTECH ACTIVITY
© Oliver Wyman 

There may be a mismatch of current activity and strategic pote

Proposition Distribution Operations“Overcrowded – shakeout possible• Situational• Community-basedWhite space• From insured to protected• Risk partner• Digital risks

“Overcrowded – shakeout possible• PCW• B2C Online Broker / VCWWhite space• Affiliate integration• Corporate platform• Financial partner

“Overcrowded • Digital sales White space• Underwriting

Activity level Strategic assessment Activity level Strategic assessment Activity level S

High Low High Low High 

Source: Oliver Wyman
Maintaining competitivenes

insurtech

3
© Oliver Wyman 

Bay Area Software/ web development, artificial intelligence, microprocessor development

AustinComputertechnology (soft-& hardware)

BangaloreSoftware/ web development, e-Commerce

MoscowSoftware development

Sao PauloFinTech, software development, SaaS

ParisSharing economy, artificial intelligence

SFe-

Berline-Commerce, gaming, SaaS

LondonFinTech, web development

Tel AvivCyber security,defense 

Boston &New YorkLife science, biotech, robotic, pharma (Boston); FinTech (NYC) 

Chicago & TorontoE-Commerce, software/ web development

MontrealArtificial intelligence/ deep learning

AmsterdamSharing economy, 3D printing, eCommerce

MunichInsurtech

Los Angeles Mechanical engineering, software engineering

Top global tech hubs footprintTech hubs are spread globally across various cultures with a sconcentration in North America and EuropeSource: Business Insider; Oliver Wyman

SeattleB2B solutions, software engineeringVancouversoftware development, biotechnology, entertainment
© Oliver Wyman 

Success factors for tech hubsThe success of dominating existing hubs is based on a clearly of success factors

+

NETWORKING EFFECT

Selfreinforcing

WINNI

FACTO

Culture 

Factors that differentiate a to sustain hub success on 

Virtuous circle – factors attract players whose involvement into the hub reinforces the factors

Location Talent

Public 

Authorities

BASIC

FACTORS

Funding

Infrastructure

Prerequisite factors that need to be in place andsufficiently satisfied for hub development to be possible
© Oliver Wyman 

LocationPublic authoritiesInfrastructure

Success factors – self assessment for the US?

FundingTalent

Poor Top

Sufficient

Hub basic factors Hub winning facto

Globally leading expertiseLighthouse visionaries Culture 

Poor Top

Sufficient

Poor Top

Sufficient

Poor Top

Sufficient

Poor Top

Sufficient

Poor Poor 

?????

Poor 
QUALIFICATIONS, 

ASSUMPTIONS AND LIMITING 

CONDITIONS

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we deem to be reliable; however, we make no representation as to the accuracy or completefindings contained in this report may contain predictions based on current data and historicasubject to inherent risks and uncertainties. Oliver Wyman accepts no responsibility for actual The opinions expressed in this report are valid only for the purpose stated herein and as of tis assumed to revise this report to reflect changes, events or conditions, which occur subseqAll decisions in connection with the implementation or use of advice or recommendations coresponsibility of the client. This report does not represent investment advice nor does it provof any transaction to any and all parties.