“The last agent is already born” is a slide title we have seen at industry
conferences for the last 10 years
Online distribution
and embedded insurance
Personal lines 6% Brokers &
(P&C + Life&Health) independent
agents (including
Global insurance Tied Agents 37% affinity)
& insurer salesforce 38%
premiums
2020
20%
Bancassurance
All around the globe, sales of insurance policies continue
to be dominated by physical intermediaries
Source: “Shaping the future of digital insurance”, Carlo Bewersdorf, iptiQ CEO, European IoT insurance Observatory plenary session Oct ’21 1
We have not seen yet any sign of digital disruption in any insurance market
Use of destination ground transportation by U.S. business travelers
Percentage of ground transportation business expenses filed by certify customers1
80
70
Ride hailing (e.g. UBER)
This is how 60
50
DISRUPTION 40
looks like 30 Rental cars
20
10 Taxis
0
2014 2015 2016 2017 2018
All around the globe, sales of insurance policies continue
to be dominated by physical intermediaries
1 This counts the number of separate expense charges, not the total spent
Source: Certify 2018 2
For all 2020, we heard buzzwords about digital shift in the insurance
distribution due to Covid
German P&C insurance Italy Auto insurance Progressive – Personal auto
(channel market share, %) (Internet channel share %) (premiums by channel, %)
Source: GDV Source: ANIA Source: Progressive
100% 10 100%
Other
90% 13.4% 13.9% 13.7% Direct. 9 90%
14.3% 14.3%
80% 8 80% Indipen-
Bancass. dent
agents
70% Broker & 7 70%
indepen-
60% dent 6 60%
agents
50% 5 50%
40% 4 40%
30% 3 30%
Tied 49.1% 50.0% 50.7% 51.6% Direct
20% agents 2 20%
10% 1 10%
0% 0 0%
2016 2017 2018 2019 2020 2013 2014 2017 2019 2020 2017 2018 2019 2020
What really happened was the resiliency of the intermediaries
3
A further confirmation of the resiliency of agents and brokers:
Insurtech startups (D2C) are approaching them to survive
In the independent agency channel, we will be
paying a commission. So instead of a flat fee to
get customer, as you see in the direct channels,
we will be paying a commission based on the
premium that comes through channel.
And so we like that. We think it's very cash flow
efficient because you do not pay all of the
customer acquisition costs upfront, but rather
you get to really pay that over the life of that
customer*
Talking about online distribution is good for raising VC money
However, agents and broker seem better for selling policies
* Root earning call Nov ‘21 4
Insurtech can bring a concrete impact on the core insurance activities
Insurtech can make the
insurance sector stronger and
How can
therefore more capable of
InsurTech
achieving its strategic goal in this
help?
changing word: to protect the
way people live!
5
A personal story: my experience in insurance innovation
Matteo Carbone
InsurTech Investor and co-founder
Non-Executive Director at Net Insurance
Founder and Director of the IoT Insurance Observatory
Member of the Advisory Board for HCS Capital’s Cyber Fund III
Global Ambassador of the Italian Insurtech Association
+15 years strategic consulting (former Principal with Bain & co.)
6
A personal story: Archimede/Net Insurance
Archimede SPAC Bancassurance, Insurtech inside Insurtech kept the promise
• Promoted a SPAC raising 47 M€ PERVASIVE INSURTECH APPROACH • 450.000 clients and €118M (20% higher than
• Acquired an existing Italian insurance ENABLING THE WHOLE INSURANCE VALUE CHAIN
Archimede’s original plan)
carrier Pervasive Insurtech Mixed «Open-
approach platform • Traditional Net Insurance business increased
Feb 21st 2018 enabling the whole core-satellite» by more than 20%1
Archimede SPAC creation insurance value chain Innovation model
Founders: Battista,
Carbone, Rosmarini
April 16th 2018 • New business represent almost 50% of the
Archimede
announcement and LOI top line1
May 2nd 2018 with Net shareholder
Started the Archimede
IPO May 17th 2018 • Combined ratio at 67%
€47M IPO successfully
May 21st 2018 closed Innovative
API Bancassurance Insurtech enabled
Archimede negotiated
on the AIM platform
distribution
channel support products Net Insurance stock performance
June 18th 2018
Binding offer to Net
Oct 16th 2018 Italian P&C no auto insurance (%)
IVASS authorization 7.174
Oct 18th 2018
Battista appointed as CEO Bancassurance Online 6.292
Nov 19th 2018 of Net
Business combination
approved by the Net Nov 20th 2018 5.410
shareholder meeting Business combination
approved by the
Archimede shareholder 10 4.528
9.4
Dec 17th 2018
Closing
meeting
5.3 5.6 58% Return 3.646
Jan 21st, 2019
Dec 31st, 2018
for an Archimede investor2 2.764
Archimede reverse
Shareholder meeting to
merged into Net
2013 2014 2017 2020 Jan ‘19 Jan ‘20 Jan ‘21
appoint the new Board of
Directors
1 Results at June 30th 2021 2 As of October 31st 2021 7
A personal story: Insurance IoT is the Insurtech topic I’m most passionate
about
The IoT Insurance Observatory
Our current members Our figures
The five annual Observatory editions:
hours of one-to-one
workshops over the five 82 insurance companies,
2300 annual editions of the
including:
Observatory • 4 of the top 5 Reinsurers
• 11 of the top 15
European Insurance Groups
plenary symposiums
• 9 of the top 15 US P&C
24 between North America
Insurance Groups
and Europe
international
7 publications 45 tech players and vendors
8
The IoT Insurance Observatory membership provides access to the
most globally relevant insurance IoT knowledge
Observer Interpreter Storyteller
The most pragmatic We interpret best practices The knowledge is delivered
multiclient research and pitfalls for the members through workshops dedicated
specialized in the insurance leveraging experience built by one-to-one to each of the
IoT domain based on a advising almost 100 different organizations which are
constant observation on the organizations in more than 15 members of the Observatory
usage of sensors in different countries on IoT insurance and plenary symposiums
insurance business lines projects both in North America and
around the globe Europe
9
The Observatory contribute to many international publications about
insurance IoT
Connected Insurance Insurance Nexus &
Bain Swiss Re
Observatory IoT Insurance Observatory
Bain Financial Service Brief, The connected and sustainable Unveiling the full potential Connected Insurance Report,
September '16 insurance, December '16 of telematics, May ‘17 Dec ‘18
American Family Insurance Cambridge Mobile Telematics
The Geneva Association Carrier management
& IoT Insurance Observatory & IoT Insurance Observatory
Smart Home Insurance UBI consumer surveys From Risk Transfer to Risk Insurance is Getting Connected
April ‘19 2020-2021 Prevention, May ‘21 August ‘21
10
The world (and your clients) will be more and more connected
The IoT paradigm - a new way of thinking
Components Functionality
Sense
Sensors
(get the information from
(things)
the outside world)
Communication
Control
Processing units
(understand, decide,
(IoT platform)
learn)
Actuators Act
(frequently “things”) (implement the decisions)
You should define your role in this connected world!
Source: IoT Insurance Observatory 11
Telematics has already been recognized as a necessary capability in
personal auto insurance
Number of personal auto vehicles connected to an insurer by year
(North America)
M “If you're not leaning into telematics,
9 you’re not going to be in business for
8 very long, at least on a profitable
7 basis”
6
Tom Wilson, Feb ‘21*
5 Mobile
4 “Geico clearly missed the bus and were
3 late in terms of appreciating the value
OEMs
2 of telematics. They have woken up to
1 OBD the fact that telematics plays a big role
- in matching rate to risk”
2012 2013 2014 2015 2016 2017 2018 2019 2020 Warren Buffet, May ’21**
Source: IoT Insurance Observatory
All the auto insurers (who will survive) will be telematics-based
* Bank of America Securities’ virtual conference 2020 https://www.insidepandc.com/article/2876mmytwlmxq2wtztdds/companies-without-telematics-offerings-wont-be-in-business-long-allstates-wilson
** Berkshire Hathaway annual shareholder meeting https://www.riskmarketnews.com/buffett-speaks-the-hard-truth-about-insurance-at-annual-meeting/
12
The IoT impact on the customer engagement is terrific
Traditional insurance* IoT-based insurance**
An average insurance customer interact Smart home insurance player’s customers:
less than 4 times a year • 40% are active daily
• enter in the app 1,6 times a day for the first 2
One third of customers has zero months (After the 9th months 1,2 a day)
interaction
40% drivers of a telematics digital broker
check daily theirs score and rewards
Wearable-bases life insurance portfolio of
customers interacts 1 time a day
X100 more interactions
*Source: Bain’s Customer Behavior and Loyalty in Insurance Report 2019 **Source: IoT Insurance Observatory 13
However, nothing happens overnight in the insurance sector
Incubation phase Exploration phase Learning phase Growth phase Maturity phase
"Does the approach “What is the ROI of the “What is the best way to “How to extract more
make sense?" use case?" do it at my company?" value from the data?"
Personal
Commercial Commercial Auto
Workers’ General
Property Auto
Comp Liability
Health and
Life
Homeowner
• First pilots focused on • Roll out by few • Only few top players • IoT potential fully • IoT approach is the
one single use case, pioneers (with some understand IoT full understood and standard for the
followed by product volumes) potential (UW, claims, increased commercial insurance business
lunches • More pilots and VAS), define their own push by all players • Relationship
product lunches, by approach (e.g. big • Differentiating consolidation between
greatest part of players data) and push to sell solutions / providers top players and
by using a "me-too" more over top players providers, cross-
approach • Commercial offer country diffusion of
differentiation best practices
Source: IoT Insurance Observatory, represented the level of maturity of the most advanced market for each business lines 14
Many insurers are currently investing in IoT-based prevention solutions
NOT
EXHAUSTIVE
Real time
risk
mitigation
Behavioral
change
Happened incident Detected a risky situation Lack of prevention
What are you waiting for?
15
Go to market one of the key elements of the IoT strategy
Frequent issues that have prevented the success
(insurance) IoT capabilities development
Target customers
Leadership capabilities development
• No market fit
Value proposition • No reasons strong enough for purchasing the
product
Insurance IoT use cases • Lack of a strategy for using the data in order to
create a strong value proposition:
‒ not used at all the data
Go to market or
‒ not identified the need of all the relevant business functions
• Lack of a link with the distribution approach
Source: IoT Insurance Observatory 16
In conclusion, Insurtech is the “superpower” for assessing, managing
and transferring risks
Even agents and
brokers are going
to use technology
and data for doing
their job better
17
18
