Scorboard for Australia & New Zealand

SCORboard For Australia & New Zealand

Q2 2017 Newsletter Issue No. 1

Dear friends,

It is a great pleasure to invite you to read the first edition of our SCORboard Newsletter. On a regular basis, we will highlight relevant and thought-provoking topics for the Australian and New Zealand market.

In 2017, the life insurance industry continues to focus on regulatory change and By Dion Russell compliance, and responding to vital concerns about consumer confidence and trust. CEO SCOR Global Life The Life Insurance Reforms, the FSC’s Code of Practice, several ongoing and planned Australia and New Zealand regulatory (APRA and ASIC) and government reviews remain key challenges that have [email protected] been consuming resources – in some cases away from innovation plans.

This edition covers insights from a recent ReMark global consumer study, an update on Insurtech, SCOR’s Velogica offering with Adviser Connect, and SCOR’s B3i blockchain initiative. Any comments and feedback on these articles would be most welcome.

As I take over as CEO in Australia and New Zealand, we have grown our team, our capabilities and competencies, particularly around underwriting, claims and experience analysis. We are absolutely committed to further strengthen our value proposition and to collaborate further with you now and into the future.

As always, we appreciate you choosing SCOR as your reinsurance partner and look forward to working together in 2017 and beyond.

Dion Russell CEO SCOR Global Life Australia and New Zealand

Inside this issue

DEBUNKING THE STATUS QUO TO ENGAGE CUSTOMERS...... P2

THE RISE AND RISE OF INSURTECH...... P4

TECHNOLOGY DRIVING POSITIVE HEALTH OUTCOMES IN CLAIMS...... P7

B3I INITIATIVE LOOKING TOWARDS THE FUTURE OF OUR INDUSTRY...... P9

SCORboard | Q2 2017 | 1 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor ReMark Group Data Reasons for Debunking the customers not status quo to engage buying life insurance customers 10% The gap between the insurance industry’s There is ample opportunity to Procrastinators intentions and the customer’s experience enhance value perceptions through reinforces a lack of customer conviction communication that speaks to the in the proposition, according to the specific situation of a customer – whether ReMark Group 2016 Global Consumer it is a question of impressing a sense Study, You can’t always get what you of urgency upon Procrastinators, or want. ReMark, owned by SCOR, is a enticing Struggler segments with flexible, 33% global direct marketing and consultancy personal propositions, or education on Strugglers company specialising in end-to-end pricing. marketing and technology solutions to create maximum value for clients and If the first avenue’s theme highlights the partners. importance of improving conversion, the second considers the critical role of To close this gap, ReMark suggests underwriting in purchase completion. 16% insurers have four avenues to pursue: Consumer concerns – and confusion – about underwriting compound the all- Self-Reliants • More engaging, emotive messaging encompassing issue of trust. There is an • The effective application of urgent need for the seamless integration automated underwriting of customer support and advice into an • Product innovation intuitive and intelligent digital journey. • Investment in wellness and 35% wearables Disconnects abound. Whether the gap is between expressed customer value Innocents Consumer response demonstrates that perceptions and actual purchasing current demand creation efforts, such as behaviour or the popularity of the the relentless emphasis on protection integration of life with health insurance gaps, simply have not resonated. rather than with mortgages and savings, the research indicates that customers 6% can’t always get what they want (if indeed Other they are even fully aware).

Clearly, insurers are faced with the reality Source: ReMark Group 2016 Global Consumer of working harder to give their customers Study, You can’t always get what you want what they need. This demands deeper insights into the cognitive biases and emotional and social influences shaping customer decisions to ensure insurers can close the gap between customer expectation and experience.

But, in these challenges, lie other opportunities. Customer appetite for health-related innovation is matched by a willingness to share data. Supply side investment will further drive demand, as the success of wellness programmes in developed markets would attest.

••• Continued

SCORboard | Q2 2017 | 2 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor You can’t always ••• Cont. get what you want

Generating a perception of need for life insurance across the globe.

Published by ReMark Group in partnership Debunking the status quo to engage customers with Cass Business School, City, University of London Last year we challenged November 2016 the industry to see products and services through the eyes of its customers. This year we challenge the industry to rebuild the trust that has been eroded between the insurer and the customer.

The potential revolution that wellness You can’t always get what you want and wearables could have on the life demonstrates that it’s time the industry Maximum Value Creation insurance industry is apparent. Live data moved away from continual focus on has the potential to drive an evolution in protection gaps and started addressing underwriting capability, and technology- the engagement gap. It is through enabled personalised solutions have meaningful, more frequent engagement Access the ReMark 2016 Global obvious implications for customer that insurers are most likely to restore Consumer Study here. value perceptions. While there has customer conviction in the promise to been a reliance thus far on the ‘wealthy protect. well,’ greater long-term value lies in engaging the less healthy for sustainable behavioural change.

There is a long way to go to overcome industry challenges; while most customers will probably never want life insurance, insurers need to seek more effective ways to help customers feel the need.

CA UK CN GER USA JP

MX FR MA IN BR AUS SA

EMERGING MARKET

DEVELOPED MARKET

The ReMark Global Consumer Study is based on research conducted through online interviews with 8,000 insurance consumers across 14 key life markets in 2016 that account for around 85% of global life insurance risk premiums and approximately 80% of global GDP.

FOR FURTHER INFORMATION PLEASE CONTACT: [email protected] SCOR Australia | Level 33, 1 O’Connell St. | Sydney NSW 2000 | Australia

SCORboard | Q2 2017 | 3 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor Technology The Rise and Rise of Insurtech “ By Richard Millington Paolo De Martin, CEO of SCOR Global Life Senior Marketing Manager SCOR Global Life Technology is disrupting and reshaping the life Australia and New Zealand insurance industry globally [email protected] – distribution, underwriting, products, claims – no part of the value chain is left untouched. Consumers’ needs are at the heart of these evolutions, and insurers must adapt to their expectations and re-think the consumer journey. Reinsurers can support insurers in simplifying the pathway to purchase and help them develop innovative, tech-driven propositions.

Insurance ‘ripe’ for disruption Take for example the multinational research conducted by U.S. tech Historically, the insurance industry has market intelligence specialists, CB lagged banking in terms of technological Insights. At the start of 2015, there were evolution. This phenomenon has been approximately 300 start-ups worldwide seen consistently across the globe, and engaging in disruptive technology. Now, Australia is no exception. As the banking there are well over 1,000. sector matures, investors are increasingly seeking to disrupt other financial services Deal activity in the insurtech space hit its industries and insurance is seen by highest annual total in 2016, according many as the next great opportunity for to CB Insights. In total, deals to insurtech investment. start-ups rose 42% on a year-on-year basis in 2016. Total funding to insurance There is compelling evidence to suggest start-ups in 2016 hit $1.69 billion (USD), that this disruption is already happening the second consecutive year investment extensively abroad and on a much dollars to the space topped $1 billion smaller scale, in Australia. (USD).

••• Continued

SCORboard | Q2 2017 | 4 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor ••• Cont. The Rise and Rise of Insurtech

Figure 1 provides some important Figure 1: Insurance Tech Deals by Geography 2016 geographical insights. In 2016, 59% of insurtech deals went to U.S.- headquartered start-ups, however the remaining 41% of deal activity was dispersed among a set of culturally diverse countries, with no other country comprising more of 6% of deal activity. Importantly, Australia comprised of 1% of deal activity, suggesting that while investment is starting to happen, insurtech in Australia is still in its infancy.

As seen in Figure 2, insurtech developments have already started penetrating the three primary business lines. The property and casualty (P&C) sector has seen the most significant investment to date. This is largely due to the prevalence of telematics/telemetry, with the main applications being connected cars, and health and home monitoring. Life insurance is lagging Source: CB Insights, January 2017 P&C and Health in every part of the value chain.

••• Continued Figure 2: Where Insurtechs Are Focusing

Source: McKinsey Panorama Insurtech Database

SCORboard | Q2 2017 | 5 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor ••• Cont. Data The Rise and Rise of Insurtech By the Numbers… Australia: A land of opportunity to create the efficiencies that enables and hurdles compliance. When considering the scale of the Insurtech start-ups, despite being in an A second major challenge for embracing overall insurance industry, it is easy early period of existence in Australia, insurtech in Australia is the complex to contemplate why so many see have the potential to generate value and ever-changing nature of the our industry as ripe for disruption. At across all business functions and may local regulatory environment. The life the end of 2015*, Global insurance change the nature of how some insurers insurance industry in Australia has faced premiums in US dollar terms were run their business entirely. The impact considerable scrutiny with reviews being estimated to be approximately: of start-ups will vary depending on their undertaken by ASIC, APRA and the PJC. respective strategies. While the majority Understandably this is taking a large (In Trillions of US Premium Dollars) see opportunity in launching product majority of leadership time and focus, solutions that are likely to disrupt our while in many instances, forcing digital industry, there are many insurtechs evolution to take a back seat. that can offer tangible benefits to our industry through enabling technologies It is becoming clear that insurers who $2.5 that significantly improve customer dedicate resources toward exploring new Global Life experience. innovations and technology partnerships will enjoy a competitive advantage as Insurance If history is anything to go by, insurers are the market continues to evolve. As a unlikely to respond consistently to the society, we are increasingly becoming an opportunities presented by the current ‘always-connected’ population, therefore market evolutions. Insurers who have insurers must seriously consider digital the ability to move quickly and embrace investments in order to offer enhanced the emerging technologies will be well customer-centric products and services. It $1.4 placed for future growth. Those who is imperative for consumers’ needs to be Global Non-Life do not are likely to find it increasingly at the centre of any digital evolution. challenging to remain competitive. Suffice to say we are at a very important Ultimately, insurtech will impact the crossroads; however, there are many business models of current insurers and competing demands that perhaps make prospective entrants to the market. digital innovation a lower priority than it Some may see insurtech as just another $1.2 should be. buzzword, and consider start-ups to Global be an unwelcome disruption to the There are several reasons why the traditional risk-pooling model. However, Accident & Health Australian insurance industry has been there are also those who will see it as slower to promote digital innovation a great enabler for creating a more *Source: Axco Global Statistics compared to similar markets in the seamless and connected experience U.S. or Europe. A major contributing for customers. Our response to these factor is the at-times onerous legacy opportunities will shape our future, and operational systems of established those who respond first will be best insurers, which make it very difficult to placed to capitalise. collect and analyse significant quantities of structured and unstructured data. Whilst the recent Guidance Note 33, best practice for group insurance data, is likely go some way toward improving data consistency for life insurers, technology solutions are likely to be the critical link

SCORboard | Q2 2017 | 6 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor Velogica Technology driving positive health outcomes in claims

By Paula Bourke SCOR Global Life has formed a Improved Claims Outcomes Strategic Head of Underwriting & Claims partnership with Adviser Connect to SCOR Global Life provide a best-in-class underwriting and Insurance books and therefore Australia and New Zealand claims solution, Velogica Asia Pacific. the number of claims have grown [email protected] substantially, particularly within the Velogica and the SCOR Global Life ongoing management of long-term Australia team can now provide a claims disability risk, whereas technology solution to integrate the biopsychosocial implementations have typically model into early claims management focused on the back-end operational triaging, driving positive health outcomes management of claims. and giving customers access to appropriate support services. Velogica and the SCOR Global Life Australia team, can support insurers to World-Class Underwriting lead with a strong values-based culture by using technology integration to help Velogica is a global proposition to the screen for long-term disability risk, giving local market, combining state-of-the-art customers early access to rehabilitation software and world-class underwriting and other support services to improve that is already highly rated within the health outcomes. industry by customers, underwriters and advisers. At Velogica’s core is an In 2011, the Royal Australasian College of automated underwriting solution, Physicians and the Australasian Faculty of offering life insurers a superior new Occupational & Environmental Medicine business acquisition capability to meet released the Consensus Statement on a range of consumer needs, in one the Health Benefits of Work and over the seamless and efficient process. past few years, the industry has become well-educated on the importance of Quote and apply modules, whether from this statement. We all know that good the Velogica suite or the insurer’s own, work is good for people and as an are integrated using market-leading, industry, we are striving to truly achieve flexible and configurable software. The improved health for consumers. It is result – a convenient, responsive and important to identify customers who intuitive journey. require health support intervention early. This can be achieved by integrating the Velogica enables insurers to service biopsychosocial model into early claims multiple brands, products and channels management triaging. which enhances flexibility in product positioning. These key capabilities ••• Continued include flexible product design, multiple underwriting completion methods, mobility, multi-branding/white labeling and partnering support.

SCORboard | Q2 2017 | 7 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor ••• Cont. Technology Driving Positive Health Outcomes in Claims

The biopsychosocial model is a broad In summary, SCOR Global Life and view which considers that disability Adviser Connect, in partnership with outcomes and durations are impacted Velogica Asia Pacific, have assembled a by the variable interaction of biological team of more than 60 client and technical factors (genetic, biochemical, etc.), experts with platform knowledge, psychological factors (mood, personality, software expertise and underwriting behaviour, etc.), and social factors and claims skills to work with clients to (cultural, familial, socioeconomic, produce solutions that meet their specific medical, etc.). The biopsychosocial requirements. model extends on the biomedical model, which only attributes disease to generally We truly believe our new partnership will biological factors such as viruses, genes, assist insurers in the collective goal to or somatic abnormalities. provide customers access to appropriate support services. This is the first step To identify biopsychosocial factors, to improving both the customers Velogica reuses the underwriting rules physical and mental health and well- on the front end to create claim rule being, leading to overall positive health sets with reflexive questioning capability outcomes. to better screen for claims with high disability duration risk. “ Paolo De Martin, CEO of SCOR Global Life The combination of SCOR Global Life’s risk and underwriting expertise and of the leading- edge Adviser Connect technology represents a unique opportunity that will add significant value for our Asian clients.

SCORboard | Q2 2017 | 8 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor SCOR Group B3i initiative looking towards the future of our industry “ Denis Kessler, SCOR Chairman & Chief Executive Officer SCOR’s role as a global Tier 1 reinsurer is to experiment and test cutting-edge technology like Blockchain. The success of the Proof of Concept conducted by SCOR on Blockchain, along with the work of the B3i members on this technology, will help to accelerate the digitalisation of the insurance and reinsurance sectors, to the benefit of the whole industry.

A growing number of experts are edge platform and to also enhance touting blockchain technology as an the Ruschlikon initiative (see sidebar). emerging major disruptor in the financial Blockchain is essentially a secured services sector with the vast potential distributed database, or ledger, shared to overhaul existing business models by all parties to an exchange. including infrastructure, the approach to settlements and customer interactions.1 To date, SCOR is very pleased with the results of these tests. They As a result of imminent changes, SCOR have demonstrated that blockchain recently began testing blockchain technology is agile and quick to technology and launched a technical implement; it simplifies and accelerates accounting Proof of Concept (PoC) to interaction with real-time status assess the feasibility of using this leading- simultaneously shared by the business partners involved; and the technology has the potential to efficiently reduce costs. To learn more about SCOR’s Blockchain test, please view our To further explore the potential use of video. distributed ledger technology for the insurance industry, SCOR has also joined the Blockchain Insurance Industry Initiative B3i. Since its launch in October 2016, the initiative has gained broad attention across the industry and beyond, while achieving a truly global scope with additional members joining from Asia, Europe and the Americas.

••• Continued

1How Blockchain Technology Will Disrupt Financial Services Firms, The Wharton School, University of Pennsylvania, Knowledge @ Wharton, May 24, 2016. SCORboard | Q2 2017 | 9 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor ••• Cont. Vision B3i Initiative Looking Towards the Future Investing in Tomorrow The current 15 members of B3i are SCOR, In summary, if blockchain technology Achmea, Aegon, Ageas, Allianz, Generali, proves to be a viable tool, it could Ruschlikon’s primary purpose is Hannover Re, Liberty Mutual, Munich transform the insurance industry through to optimise administrative costs Re, RGA, Sompo Japan Nipponkoa a shared, transparent record of contract- and enhance client services. Insurance, Swiss Re, Tokio Marine related information. Streamlining Ruschlikon, a global community Holdings, XL Catlin and Zurich Insurance communication and transactions would of insurers, brokers and reinsurers, Group. subsequently improve industry processes aims to further automate back and provide better insurance services office processes by implementing In a collaborative effort, members of to customers. The Blockchain Insurance the ACORD standard messages the B3i initiative will explore the ability Industry Initiative B3i intends to share for technical accounts, claims and of distributed ledger technologies to initial results in June 2017. financial accounts, along with the increase efficiencies in the exchange of Ruschlikon Best Practice Processes. data between reinsurance and insurance The Ruschlikon initiative brings companies. In order to realise the proof- together more than 50 companies. of-concept stage, the participating Its Steering Group is composed members will implement a pilot project of SCOR, AIG, Aon Benfield, Guy aimed at transacting reinsurance Carpenter, Lloyd’s, Munich Re, Swiss contracts with each other. Re, Willis Towers Watson, and XL Catlin.

Chart source: Market survey on the potential and market acceptance of an electronic platform to facilitate (re)insurance administration, University of St. Gallen, Institute of Insurance Economics, pg. 7.

SCORboard | Q2 2017 | 10 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor SCOR Australia & New Zealand Leadership Team

2016 We are dedicated to providing you with best-in-class solutions and service today and in the future. Please reach out to your regular SCOR contact and any one of us on the Australia and New Zealand leadership team any time we can be of assistance.

THE TEAM

Dion Russell Nicole Marshall Eric McNamara Paula Bourke Chief Executive Officer Head of Marketing Head of Commercial Strategic Head of Tel: +61 (0) 2 9276 3512 Tel: +61 (0) 2 9276 3509 Development Underwriting & Claims Email: [email protected] Email: [email protected] Tel: +61 (0) 2 9276 3549 Tel: +61 (0) 2 9276 3550 Email: [email protected] Email: [email protected]

Danny Alexander Iain Bulcraig Colin Weir Head of Pricing Chief Financial Officer Chief Risk Officer Tel: +61 (0) 2 9276 3542 Tel: +61 (0) 2 9276 3516 Tel: +61 (0) 2 9276 3505 Email: [email protected] Email: [email protected] Email: [email protected]

We value your feedback and sincerely appreciate your continued business.

SCOR Global Life Australia Pty Limited Tel: +61 (0) 2 9276 3501 Level 33 | 1 O’Connell Street Fax: +61 (0) 2 9276 3500 Sydney NSW 2000 Fax: +61 (0) 2 9276 3560 AUSTRALIA [email protected]

The information conveyed and the views expressed in this newsletter are provided for informational purposes only and are based on opinions and interpretations made by SCOR Global Life. The opinions and interpretations expressed by SCOR Global Life may not be the only interpretation available. This publication should not be copied or shared with any other company, reinsurer or consultant without obtaining prior approval from SCOR Global Life. SCORboard | Q2 2017 | 11 PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor