To disrupt or to be disrupted? That is the question insurers must address if they are to make the once-futuristic concepts in telematics, wearable tech and real-time risk underwriting into here-and-now operational capabilities. There is a clear and compelling opportunity for insurers to re-engineer the fundamental value proposition to customers through transformative product innovation. This webcast discussed: o Customer data security and privacy o Creating an advanced analytics culture o Product innovation o Program management for underwriting, life insurance and claims o Forming a plan and taking action o Key findings from our 2016 Sensor Data Survey - http://www.ey.com/GL/en/Industries/Financial-Services/Insurance/ey-2016-sensor-data-survey

1. Disrupt or be disrupted
2016 EY Sensor Data Survey
16 March 2016

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Today’s moderator
Kevin D. Koenig
Global Insurance Analytics & Data Excellence
Advisory leader
Ernst & Young LLP
Steve W. LaValle
Principal, Financial Services Advisory
Ernst & Young LLP

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Today’s agenda
► Optimizing and monetizing the collision of sensor data
► Leaders vs. laggards
► The road ahead

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Today’s presenters
Tim Lecam
Senior Manager, Global
Insurance Practice,
Underwriting
Ernst & Young LLP (US)
Bernard Klein Wassink
Principal, Global Insurance
Practice, Customer & Growth
Ernst & Young LLP (US)
Imran Ahmed
Partner, Global Advisory
Services, Claims
Ernst & Young LLP (UK)

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Overview
EY’s 2016 Sensor Data Survey
► First-of-its-kind survey on the impacts of
sensor-based technology
► Conducted by EY’s global insurance practice
► Participants in seven countries
► C-suite (75%)
► VP or above (97%)
► 1,782 organizations globally, including 400 insurers
Sectors
Insurance Banking Electronics Retail Travel Automotive Telecom
Key takeaways
► The impact of sensor and emerging
technologies on the insurance industry
will be extensive, profound and lasting
► New mindsets and capabilities, different
business models and the integration of new
data and technologies are necessary for
survival in a changing market

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Defining “sensor data”
Wearable or
personal technology,
sometimes
called “fit tech”
Sensors on objects
– personal and
commercial vehicles
and shipping
containers
Location-based
sensors in factories,
warehouses, offices
and homes – “smart”
thermostats, alarms
and cameras
Geographic
information systems
and satellites providing
geophysical,
topographical,
climatological and
hydrological data

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Implications and takeaways
Direct, unmediated customer relationships
may soon become the rule as insurers gain
direct access to objective and unfiltered data.
Truly individualized relationships will replace
generic segmenting and rudimentary targeting
of the past.
The days of selling just insurance are
numbered.
1
2
3

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Insurers need self-reported data today more
than any other industry
Insurers are
positioned to
become much
less reliant on
agents and
customers to
provide data.

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Leaders vs. laggards

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Customer centricity is not a performance
differentiator
Most defining centricity
31%
18%
15%
11%
9%
8%
7%
30%
10%
20%
11%
13%
11%
6%
Customer
Innovation
Finance
Brand
Compliance
Self
+8 points
-5 points
-4 points
Sales
Leaders Laggards
Leaders and laggards are comparably customer- and sales-centric

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Impacts
► Leaders: better differentiation and risk pool management
► Laggards: adverse customer self-selection, lower margins and higher risk
Some customers
get LESS value
Some customers
get MORE value
100% Agree 100% AgreeDisagree
66%
42%
18% 22%
46%
69%
A new age of personalization and
differentiation
Impact of new data sources
Downselling
► Limited bundling
► Generic offers
► Higher prices for
high-risk features
Upselling
► Unique bundles
► Tailored offers
► Lower prices for
low-risk features
Leaders
All respondents
$ $
Laggards

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Insurers lag in using insights from new
data sources
Percentage of respondents, by sector, reporting that their companies
can use insights from new data sources to boost customer value
InsuranceElectronicsTransportationAutomotive
54% 36%50% 47% 47% 46%47%
Retail TelecomBanking/
financial
services

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Auditable assurances that data
was used only for the agreed-upon
intended purposes
Commitment to data protection
both now and in the future
Benefit improvements through
pricing, convenience, safety,
offer relevancy or product features
Customers will share data when rewards
outweigh risks
Accountability and added value are more important to customers than control
when it comes to sharing data
Accountability and added value
Control
38%
37%
36%
35%
Ability to approve or deny the types of
information collected/used and make
changes over time
Needs to be legal and routine to provide
their information
Ability to easily understand their
information and unilaterally correct errors
Ability to permanently delete or mask
information at end of relationship
Do not believe that customers
would share their data
28%
27%
23%
5%
25%
%
40
10
20
30
Fully transparent, declarations
on how data will be stored and
used including for how long

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Leaders seek more context while laggards
optimize status quo
Organizational data priorities
1. Improving confidence in the data
2. Protecting the data
3. Reducing cost of data management
4. Ensuring freshness at point-of-use
5. Connecting disparate data sources
Shared top priorities
35%20%
35%24%
39%29%
33%24%
30%23%
34%29%
33%28%
Integrating external
data sources
Adding granularity to the
data collected today
Adhering to
governance policies
Enabling more
business users
Reducing complexity
of data environment
Adding new types
of information not
collected today
Defining data
consistently throughout
the organization
Sorted by difference
Leaders Laggards

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Advanced analytics are common and
performed throughout organizations
Functions performing advanced analytics
Sorted by difference

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Leaders see opportunities across the board
Leaders believe new data sources drive improvements in how they
Leaders see
3x“
”
Market and sell
75%
Laggards 28%
Differentiate value
71%
Laggards 27%
Engage customers
71%
Laggards 27%
Set strategy
69%
Laggards 23%
Work with others
69%
Laggards 22%
Model and manage risk
70%
Laggards 24%
more
opportunity

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The road ahead: the action plan for insurers
Recognize the profound impacts and
transformational nature of sensor data –
especially relative to competitive threats.
Engage customers to help formulate the right
data strategy.
Start solving for technology – partner, develop
or takeover?
Err on the side of share.
Move forward or move on.
1
2
3
4
5

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Further reading
To learn more, visit:
ey.com/InsuranceSensorSurvey

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Further reading
Health insurer of
the future
2015 Retail Life
Insurance and
Annuity
Executive Survey
Global Consumer
Insurance Survey
2014
The future of
underwriting

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Thank you!

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