Trends 2017: Why Brokers Must Unleash their Digital Tools by CSIO

TSX Webinar Trends 2017: Why Brokers Must Unleash Their Digital Tools June 27, 2017

Facilitator & Presenter

Sarina Visram Director, Member Relations & Communications CSIO

Ellen Carney Principal Analyst, Insurance Digital Business Forrester Research

Trends 2017: Why Brokers Must Unleash their Digital Tools Ellen Carney, Principal Analyst, Insurance Digital Business A CSIO-hosted Webinar Tuesday, June 27, 2017

2:00 pm â&#x20AC;&#x201C; 3:00 pm

We work with business and technology leaders to develop customer-obsessed strategies that drive growth.

Agenda › What are the drivers that are shaping the insurance landscape in 2017? › How is digital shaping the expectations of brokers and their customers? › What are the five forces that are influencing the digital strategies of brokers and carriers in 2017?

Customers are evolving in five main ways

Source: Forrester Research. ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Customers are now hyperadopters

Smart devices are driving more frequent engagement

› By 2020, there will be 11.6 billion mobileconnected devices. › Consumer adoption of wearable devices will grow from 18% of online consumers in 2015 to 29% in 2021. › Smart home devices will grow to more than 50 million by 2021.

› Connected car services will grow to $156 billion by 2022.

ÂŠ 2015 Forrester Research, Inc. Reproduction Prohibited

Emboldened customers create urgency

Age of Age of manufacturing distribution

Age of information

Age of the customer

Emboldened buyers demand a new level of customer obsession. ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Five imperatives enable customer centricity Drive revenue with great customer experience

Maximize the business value of technology

Age of the customer Excel with customerobsessed marketing

Differentiate with digital

Build an insights driven organization Source: Forrester's Global Business Technographics Priorities And Journey Survey, 2017 Base 253 Global Insurance Business And Technology Decision-makers ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Revenue, compliance, and expenses top NAM insurer business initiatives in 2017 What is the priority of the following to your organization in the next 12 months? Most Important?

(% indicating critical or high priority)

Grow revenue Reduce costs Improve the experience of our customers Increase influence and brand reach in the market Improve our products /services Address rising customer expectations Improve our ability to innovate Better comply with regulations and requirements Accelerate our digital business Improve differentiation in the market Better leverage big data and analytics inâ&#x20AC;Ś Simplify the organization and operations Change our business model

68% 66% 66%

59% 58% 53% 52% 52% 51% 50% 48% 47%

#1 #2 #4

#3 #5

26%

Source: Forrester's Global Business Technographics Priorities And Journey Survey, 2017 Base: North American Insurance Base: Business and technology decision-makers and influencers (n=253) ÂŠ 2017 FORRESTER. REPRODUCTION PROHIBITED.

Younger customers show more interest and use in digital—even with brokers & advisors Which of the following activities would you be interested in doing with your insurance providers? All Online Canadians Direct chatting with an insurance advisor (i.e. through website) Text messaging with an insurance advisor Using the camera feature of your phone to get an insurance quote Video chatting with an insurance advisor

43%

37%

10%

Direct chatting with an insurance advisor (i.e. through website)

50%

Text messaging with an insurance advisor

46%

14%

Using the camera feature of your phone to get an insurance quote

48%

11%

36%

28%

Online Canadians, 25 - 34 Year Old

Don’t use, but interested Source: Consumer Technographics North American Financial Services Survey, H2 2016 (Canada) Base: Canadian online adults (18+) who have insurance (n=2,763 © 2017 FORRESTER. REPRODUCTION PROHIBITED.

Video chatting with an insurance advisor

19%

30% 11%

Already use 16

Millennials, feel especially strongly about their brokers and agents % of Online Americans Agreeing

% of 25-34 YOs Agreeing

I trust smaller, local financial firms more than I trust national ones

34%

44%

I trust my insurance company to act in my best interest

48%

56%

I trust my insurance agent more than I trust the insurance company they represent

32%

44%

All insurance companies are basically the same

32%

44%

Source: North American Consumer Technographics Financial Services Online Benchmark Recontact Survey, 2016: Base Online Americans 18-88 with insurance (n=4,557) ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Smartphone users have more + impressions of the agent/broker Why did you choose to apply for car insurance through an agent? The insurance agent/financial advisor was able to get a better deal for me The insurance agent/financial advisor provided good customer service

32%

23%

31%

The insurance agent/financial advisor was easy to work with

The insurance agent's/financial advisor's service provided peace of mind…

15%

The insurance agent/financial advisor was recommended by a friend or…

36%

28% 27% 28%

The insurance agent/financial advisor was helpful selecting the right…

23%

13%

22% 20% 21% 23%

I was already using this insurance agent/financial advisor for other services I had good experience with the insurance agent/financial advisor in the past I didn't know enough about the process of applying for the product/account…

17%

The insurance agent/financial advisor understands financial… I didn't want to apply for the product/account myself

35%

23%

14% 13%

I didn't know it was possible to apply for insurance without going through… Source: Consumer Technographics North American Financial Services Customer Life Cycle Survey, Q2 2016 (US) Base: US online adults (18+) who were assigned to vehicle insurance © 2017 Forrester Research, Inc. Reproduction Prohibited

16%

Used a Smart Phone Didn't Use Smart phone

They also expect to engage by mobile, butâ&#x20AC;Ś. How much do you agree with the following statements about interacting with companies on mobile devices?*

Online Canadians Online Canadians

25-34 years old

I expect companies to have a mobile app*

35%

48%

I expect companies to have a mobile-friendly website*

57%

73%

48%

69%

(% agreeing or strongly agreeing)

For which financial products have you downloaded an app on your mobile device?** My bank** My insurance company**

*: Forrester Research Consumer Technographics Canada-Europe Retail and Travel H1 Survey, Q1 2017 (Canada) **Source: (Forrester Research North American Financial Services H1 Survey, 2017 (Canada) ÂŠ 2017 FORRESTER. REPRODUCTION PROHIBITED.

Ratings & reviews hold powerful sway over your customers How important are the following types of ratings and reviews?

Online Canadians Online Canadians

25-34 years old

Consumer*

58%

69%

Professional*

40%

46%

Price comparisons with other brands

50%

45%

Consumer ratings

47%

54%

% Indicating important or very important

What information were you looking for in your research?

Forrester Research Consumer Technographics Canada-Europe Retail and Travel H1 Survey, Q1 2017 (Canada) ÂŠ 2017 FORRESTER. REPRODUCTION PROHIBITED.

…with one US insurtech looking to capitalize on their power US firm Clearsurance has amassed >5,000 agent reviews which will be unveiled as a service aimed at carriers later this year…

…and speaking of insurtech…

There are hundreds of disruptors in financial services Investing Crowdfunding

Social investing Digital investment managers

Digital retirement plan advice

Social insurance

Digital insurers

Small business funding

Social lending Digital financial advice Comparison engines Digital insurance brokers

Insurance

Banking

Digital lenders

Digital money managers

Digital banks

Mobile point of sale

Corporate foreign exchange

Digital wallets Mobile payments Virtual currencies P2P currency exchange

Payments

Source: Forrester Research: â&#x20AC;&#x153;Digital Disruption Hits Retail Financial Servicesâ&#x20AC;? report. ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

â&#x20AC;Śand these disruptors have proliferated in insurance Social insurance

Telematics insurance Digital insurance brokers On-demand insurance

173 insurtech disruptors received nearly $US 1.7 billion in venture funding in 2016

Insurance ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Source: Forrester Research. Note that logos are hyperlinked.

They use digital technologies to improve the insurance value chainâ&#x20AC;Ś 1. Making it easier for customers to compare and choose insurance products. 2. Offering flexible coverage. 3. Using data to lower risk and develop new pricing models. 4. Finding new distribution opportunities. 5. Providing end-to-end digital experiences. 6. Automating underwriting, claims, and customer service. ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

…and forming new partnerships to create value › Understand customers’ value ecosystems. › Use data insights to anticipate customers’ needs. › Identify and react to new customer needs. › Create new sources of value through digital partnerships. › Discover and act on new opportunities. Source: Forrester Research. “The Digital Insurance Imperative” report. © 2017 Forrester Research, Inc. Reproduction Prohibited

…like these… Insurance firms

Applications and devices

Car manufacturers

Ownership;

Mobile operators

Digital platforms

Partnership. 27

Lemonade has embedded insights into the fabric of its business.

ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Start-up Tuque will offer multi- and specialty cover later this year

Hippo focuses on new kinds of home content with its “smart” insurance

Cuvva offers short-term, on-demand car insurance Cuvva's mobile app lets new customers sign up, get a quote, and buy coverage in less than 5 minutes. Instead of filling out long application forms, new customers can send a selfie and a picture of their driver's license and the vehicle they're about to drive. Cuvva augments this information with geolocation data collected through its app and data available from government databases.

Source: Cuvva iPhone app ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Slice offers on-demand, by use cover in 6 US states now

Source: Slice ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Zensurance targets small biz owners

Next Insurance is another of the growing start ups targeting small business

/Source: Next Insurance ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

…with some surprising new distribution opportunities….

Source: Verdeva

…while Honda and Visa are collaborating on a connected car

So, what does the future hold for these disruptors?

➢ Most are cool digital sales front ends (aka MGAs). ➢ Getting VC $$$ and writing a press release is one thing; winning and serving customers is another. ➢ Many could be acquired by traditional carriers, especially if the economy begins to soften. 37

Master the digital basics 1. Focus on the fundamentals 2. Simplify customer processes 3. Support customer goals with smarter analytics 4. Help customers protect their digital lives 5. Promote your digital capabilities

ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Boost operational excellence 1. Create rock solid business cases 2. Open the door to new collaboratorsâ&#x20AC;&#x201D;and distribution partners! 3. Leverage your cost-savvy IT team

ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Empower brokers with robust digital capabilities 1. “Consumer-ize” those portals and agency/broker management systems

Develop your road map to personalization 1. Prioritize by the impact to the customer and your business

2. Earn your customers’ trust 3. Don’t over-do it

Convert innovations into business capabilities 1. Mainstream innovations into the core business 2. Assimilate insurtech start-ups into traditional carrier and broker businesses

ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Now, time for your questions

ÂŠ 2017 Forrester Research, Inc. Reproduction Prohibited

Thank you Ellen Carney +1.617.613.6328 ecarney@forrester.com

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