Have auto insurers to die? ..or to become irrelevant? It is not their inevitable destiny; it is only a choice. Auto insurers can be proactive, take the bull by the horns, stay relevant and become frequent in the life of their customer

1. 1
Auto Insurers’ memento mori
…remind that you have to die

2. 2
What are analysts telling you daily?
 75% of the cars on the road will
be autonomous by 2035
 70% of the cars on the road will
be driverless by 2040
 Switch from personal auto
insurance to product liability
Driverless world
 ADAS will reduce 45% of
accidents by 2020
 Total claims costs will fall by
50% in 15 years
 80% of the traditional auto
insurance business will
disappear by 2040
Fading premiums
 The new normal will be to pay
a fee for the car usage
 End of the car ownership
Mobility as a service

3. 3
The driverless scenario will came
Personal auto
insurance
will be
compulsory
for car
owners for
a long time,
as long as
cars have a
wheel
Conversion
of car stocksCustomer
acceptance
Technology
readiness
Regulation
Infrastructure
readiness
Cyber
security
The analysts’ expectations of level 5 autonomous cars

4. 4
Premiums will fade
Claim cost
reduction will
be influenced by
many other
elements not
only by car
safety tech
• Safer cars may not make safer drivers because they can
adjust habits (higher distraction)
• Safer cars don’t guarantee less accident because
increment of miles driven may offset lower risk per mile
• Higher severity can partially offset the frequency
reduction
The end (if any) of auto insurance is really far
but you will have to deal with more pressure on your cost structure

5. 5
Mobility as a service is coming

6. 6
Will Insurers be relevant in this kind of future of mobility? ILLUSTRATIVE
Supermarket
Relevance
Frequency
Hair dresser
Telecom operator
Traditional insurer
Doctor
Dentist
Social media
Real estate agent
Notary
Search engine
Bank
Credit card provider
Lower risks to
cover, invisible
insurance ancillary
to a product
purchase, …)

7. 7
How will the insurance of the mobility as a service look?
A fleet policy
• Corporate policy
insuring all the vehicles
Low premium
• High retention of risk
by the fleet manager
(e.g. high deductibles)
• Insurance seen only as
cost to minimize
Invisible
• No relation with the
final customer
• No opportunity to
cross sell

8. 8
I’m bringing you a different perspective because I love insurance
Matteo Carbone
Founder and Director of the IoT
Insurance Observatory
+11 years strategic consulting
(former Principal with Bain & co.)
InsurTech Investor and co-funder
Keynote speaker and writer on
insurance innovation
Global InsurTech Influencer
• This Insurance think tank has aggregated more
than 50 international insurance groups,
institutions and tech firms between Europe and
North America
• The initiative has three concrete outcomes:
‒ The most pragmatic multiclient research
specialized in the insurance IoT domain
‒ One-to-one workshops dedicated to each
member to discuss research outcomes
‒ Plenary symposiums with all the members
together around the same table

9. 9
The most pragmatic
multiclient research
specialized in the
insurance IoT domain
One-to-one workshops
dedicated to each member
to discuss the research
outcomes
Plenary symposiums
with all the members
together around the
same table
I have created a think tank which provides the members access
to the most relevant insurance IoT knowledge globally

10. 10
In 2017, I had more than 350 hours of discussions with the
Observatory members around the globe
Think Tanks
One focused on the
North American markets and
one dedicated to the
European markets
2
Organizations
Involved hundreds of executives
from almost 35 Insurance and
Reinsurance Groups and 15 Tech
players and Institutions
50
Plenary meetings
6 full days of keynote
speeches, discussions,
roundtable.
A terrific networking
opportunity
6
Hours of workshop
More than 120 "one to
one" workshops
(meetings dedicated to
each company which has
joined the Observatory)
>350
4
Business insurance areas addressed
Unique research based on innovation
thought leadership and insurance acumen
on all insurance business lines

11. 11
Will Insurers be relevant in this kind of future? ILLUSTRATIVE
Supermarket
Relevance
Frequency
Hair dresser
Telecom operator
Traditional insurer Insurance Iot
Doctor
Dentist
Social media
Real estate agent
Notary
Search engine
Bank
Credit card provider
Irrelevancy is only a choice for an Insurer, not his inevitable destiny!
Insurance IoT is
about connecting the
insurance sector with
clients and their risks
Lower risks to
cover, invisible
insurance ancillary
to a product
purchase, …)

12. 12
One Observatory member has chosen to proactively address the
threat of the mobility as a service
Future of mobility: this Insurer has taken the bull by the horns!
REAL CASE
Roadside assistance,
maintenance, crash support,
and a bundle of other
telematics based services
Full coverage auto insurance
with 0 deductible
(personal line product priced on
driver and car characteristics)
For a monthly fee its tied agents are offering the consumer:
A new car
(with a 24/60 months
contract)

13. 13
In this years, I have worked with players representing
70% of the international insurance telematics policies
Auto telematics maturity level

14. 14
I believe (some) insurers will succeed in the connected car war
and they will stay relevant in the life of their clients
Each of you can be one of these successful insurers!
They will orchestrate their own connected
insurance platform using data to create value
and will share this value with the customer to
deliver superior value propositions
They will maximize the value creation
using the same date to activate many
different use cases on the entire
insurance value chain
Value sharing
Connected
insurance
pardigm

15. 15
I believe (some) insurers will succeed in the connected car war
and they will stay relevant in the life of their clients
Seriously, you can win that war!
Some your competitors have already started this journey…
Photo credit: Jay Byers

16. 16
Value
Creation
Levers
SERVICES…
-…based on sensor data to deliver enlarged value propositions for
the clients orchestrating an ecosystem of partners
-…concerning information about insurance coverage and insured
risks
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks

17. 17
Earned additional service fees
A home insurance
product with an aditional
annual fee for
professional safety and
security services (and
device renting),
integrated with optional
property services offered
“a la carte” by an
ecosystem of partners
REAL CASE
Safety/Security
oRemote monitoring and
emergency services (all
the solutions discussed
before to prevent and
mitigate insured risks) to
provide peace-of-mind
Property services
oConcierge with a platform
of certified services
providers to manage the
house:
‒ Home maintenance
‒ Home services (cleaning,
gardening, ironing …)
‒ …
Solar panel
Lighting
Intrusion
alarm
Heating/
cooling
Thermostat
Flower
control
Computers &
electronics
Mould detector
Camera
Refrigerator
and freezer
Fire detection
Camera
Lock
Electric meter
Vacuum
cleaner
Washing
machine
Heat
exchanger

18. 18
The value creation framework
Traditional
bottom line
Hardware
Services
IoT
costs
Service
fees paid
by the
customer
Partners
contribution

19. 19
RISK SELECTION:
-Low-risk customer acquisition due to the storytelling
of the IoT insurance product
-Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
-Increased underwriting process efficiency
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
-…based on sensor data to deliver enlarged value propositions for
the clients orchestrating an ecosystem of partners
-…concerning information about insurance coverage and insured
risks

20. 20
Self-selected risks due to product features
An auto telematics
value proposition
focused on the
claims monitoring
has a terrific effect
on the acquisition of
low risk clients
Market
average
(20%)
Claims frequency (district average)
Black box effect
on
claims frequency
(risk adjusted)
Black box impact by district
Market
average
-20%
3.0 6.0 6.5%Market
average
4,8%
4.5
REAL CASE

21. 21
The value creation framework
Traditional
bottom line
Risk self
selection
Service
fees paid
by the
customer
Partners
contribution
Hardware
Services
IoT
costs

22. 22
RISK SELECTION:
-Low-risk customer acquisition due to the storytelling of
the IoT insurance product
-Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
-Increased underwriting process efficiency
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
-…based on sensor data to deliver enlarged value propositions for
the clients orchestrating an ecosystem of partners
-…concerning information about insurance coverage and insured
risks

23. 23
Enhanced the effectiveness of the claims evaluation
and the efficiency of the claim process
Claim dynamics reconstructed
through telematics data are
represented “near real time”
to the claim handlers on their
desktops
Photo credit: UnipolSai
REAL CASE

24. 24
As you know, claim cost is the big elephant in the room
Insurer's body
shops usage
+100%
Sources: IoT Insurance Observatory best practices
Speed settlement
+5%
Material damage
costs
-11%
Body injury
incidence
-18%
REAL CASES

25. 25
The value creation framework
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Partners
contribution
Hardware
Services
IoT
costs

26. 26
RISK SELECTION:
-Low-risk customer acquisition due to the storytelling of
the IoT insurance product
-Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
-Increased underwriting process efficiency
BEHAVIORAL CHANGE
-Indirect impact on risk level through:
-positive behavior reinforcement (including
gamification)
-culture creation
- Loyalty systems based on detected
behaviors (retention of low risk clients)
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
-…based on sensor data to deliver enlarged value propositions for
the clients orchestrating an ecosystem of partners
-…concerning information about insurance coverage and insured
risks

27. 27
Nudged clients to less risky behaviors
Instant reward to
life policyholders
for performed
healthy behaviors
REAL CASE

28. 28
The value creation framework
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Change
of behaviors
Partners
contribution
Hardware
Services
IoT
costs

29. 29
RISK SELECTION:
-Low-risk customer acquisition due to the storytelling of
the IoT insurance product
-Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
-Increased underwriting process efficiency
RISK-BASED PRICING
- More accurate rating: based
on measured "quantity" and
"level" of risk exposure
- Value propositions more
attractive to the customers
BEHAVIORAL CHANGE
-Indirect impact on risk level through:
-positive behavior reinforcement (including
gamification)
-culture creation
- Loyalty systems based on detected
behaviors (retention of low risk clients)
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
-…based on sensor data to deliver enlarged value propositions for
the clients orchestrating an ecosystem of partners
-…concerning information about insurance coverage and insured
risks

30. 30
Minimizing the premium leakage
12.00
24.00
20.00
6.00
Cheap telematics auto
insurance for teenagers,
eventual night hour driving
charged on top on their
credit card by km
REAL CASE

31. 31
The value creation framework
Incentives and discounts are ways of sharing with the customer part of the
value created in order to deliver superior value propositions
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Bottom line
with IoT
Discount
and
incentives
to the
costumer
Value
sharing
Intermediary
additional
remuneration
Change
of behaviors
Partners
contribution
More
accurate
pricing
Hardware
Services
IoT
costs

32. 32
I’m supporting this evolution through the Observatory
Objectives
Scouting and rationalizing
qualitative/quantitative
knowledge on Insurance IoT
Sharing a critical point of view of
key trends and spreading
innovation culture
Encouraging members to discuss
experiences and exchange ideas
about innovation
The scope
Any insurance solution based on sensors for collecting data on the state of an insured
risk and telematics for remote transmission and management of the data collected
Health
and life
Industrial risks and
workers’ comp
Auto… Home and
commercial property

33. 33
I’m proud to serve these 40 Organizations with the North American
and European IoT insurance Observatory
To join the Observatory feel free to write at matteo.carbone@iotinsobs.com
Allstate
Allianz Worldwide Partners
Swiss Re
Munich Re
RGA
SCOR
Reale Group
Chubb
Vienna Insurance Group
Sara
Hartford Steam Boiler
Aubay Sysdata
InsurtechNews
Portolano
Insurers
Re-Insurers
Techs
Others
Covea
IMA Assistance
Wawanesa
Neosurance
Kirey Pioneer
UnipolSai
American Modern
American Family
Travelers
UNIQA Group
AmTrust
Groupama
Zurich Connect
Economical
Societe Generale Insurance
Sonnet
Novarica
The Hartford
ArchimedeIVASS
Intellect Design
ALD Automotive
Zurich
Microsoft