Insurance Transformed (eBook)

Dr Michael Naylor is a Senior Lecturer in Finance and Insurance. He has been involved in teaching and analysis of the insurance sector for 20 years, both in New Zealand and Asia. He plays an active part in the NZ insurance community, is a frequent media commentator and presenter at international conferences. He has published in internationally respected academic journals.

Contents 6
List of Figures 8
1 Exponential Change 9
Introduction 9
The Third Wave 11
Exponential Change 12
The Ah-Ha Moment 15
Hype and the Technological Innovation Cycle 17
References 21
2 Key Technological Disruptors 22
Internet of Things 22
Data Storage and Cloud Computing 25
Big Data 26
Digital Natives and the No-Wait Generation 28
Software, not Hardware 32
Artificial Intelligence and Complexity Science 32
Hyperscaling 38
Voice and Visual Recognition 39
Digital Agents 42
Block-Chain Payment Systems 43
Robotics 44
3D Printing 45
Energy and Material De-intensification 46
References 46
3 Types of Insurance 48
House & Contents Insurance
Automobile Insurance 48
Personal Insurance 49
Travel Insurance 50
Business Insurance 50
Liability Insurance 51
Marine/Shipping Insurance 52
4 The Impact of Disruptive Technology 53
Not Business As Usual 53
Costs of Production 55
Servicization 57
Administration 59
The IT Productivity Paradox 59
Legacy Systems 60
Customers 64
Disintermediatization 73
Big Data and Analytics 75
Telematics and Dynamic Insurance 82
Individualization 85
Data-Focused 86
Insurance Rates 90
Safer Lifestyles 90
Robo-Advice 91
Conclusion 95
References 96
5 What Insurance Companies Need to Do 99
Management during Disruptive Waves 99
Existing Insurer Capacities 105
Services instead of Products 107
Automated Underwriting 109
Automated Claims 117
Cultural Change 120
Transformation Pathways 124
Legacy Systems 127
Integration with Customers 131
Big Data and Artificial Intelligence 136
Internal Systems 140
End-to-End IT Systems 145
Cost, Scale, and Platforms 148
Flexible Programming 149
Digital Laggards 151
Omni-Channel Response 154
Social Dynamics 156
Active Engagement 157
Innovators 159
Competitive Advantage and Dynamic Capacities 160
Peer-to-Peer Insurance 161
Cyber-Insurance 162
Business Ecosystems 164
Social Capital 170
Insurance Policies 177
References 179
6 Impact by Type of Insurance 181
Autonomous Vehicles 181
Automobile Insurance 187
House/Contents Insurance 195
Life Insurance 196
Health Insurance 199
Commercial Insurance 210
Cyber Security, Drones, and Hacking 211
References 212
7 The Dynamics of Decline 214
Introduction 214
Profitability vs Premiums 215
Tipping Point 217
Telematics and Turnover Rates 218
Electric and Automatic-Drive Vehicles 220
Rapid Innovation Switches 222
Barriers to Entry 223
Regulation 224
Reference 225
8 The Response of Incumbents 226
Incumbents 226
Stages of Disruption 227
Oligopolies and Disruptive Entry 233
The Economics of Digital Disruption 237
Stages of Disruption 240
Digital Strategy’s Double Game 241
Innovation Traps 247
New Entrants/Innovators 251
Possible Future Pathways 253
Disruptive Innovators 254
Keys to Insurer Success 260
Value-Added vs Commodity 262
Conclusion 264
References 267
9 Regulatory and Legal Issues 268
Pricing Regulation 268
Data Law 270
Data Privacy Issues 272
System and Flash Crashes 275
The Ethics of Insurance Bets 276
Privacy Legislation/Regulation 277
Unavoidably Higher Risk Customers 279
General Regulation Recommendations 279
Auto-Insurance Vs Product-Liability Insurance 280
Issues Around Autonomous Drive Programming 282
References 284
10 Consequences for Insurance Workers 285
Introduction 285
Mechanical vs. Analytical 286
Fluff Not Stuff 287
Complexity 288
Degree of Creativity or Human Interaction 290
Types of Jobs 292
Increasing Income Inequality 293
The Overall Job Market 293
Lessons from the Professions - the importance of programmable rules 296
References 299
11 Impacted Occupations 300
Actuaries and Underwriters 300
Administrative Staff 301
Robo-advice and Brokers/Advisers 304
Overview 304
Key Concepts for Adviser Survival 307
Change in Activities 314
Diagnostic Robo-advice Systems 319
Revenue Issues 320
Overview 322
References 322
12 Conclusion 323
The More Distant Future 324
Useful Sources 327
Index 337