Claims Transformation: Positioning for the Future

1. Claims Transformation:Positioning for the Future PCS Catastrophe Conference April 29, 2013 Karen Furtado Partner Strategy Meets Action kfurtado@strategymeetsaction.com 978.239.2741 Twitter @karenmfurtado

2. SMA: Strategic Advisory Firm Our mission is to advise, influence, and keep a finger on the pulse of the insurance industry • Advisory Retained Relationship • Project-based Consulting • Research – Syndicated and Custom 2

3. Today’s Presentation • Thinking Strategically about Risk • Claims Evolution • Examine the Marketplace – SMA Research • The State of the Possible • SMA Call to Action

4. Definition - Single View of Risk • The advance capability of real time insights and information of policy level and aggregate level risk exposure and the potential impact of the company’s book of business from a catastrophe, either natural or man made.

5. Definition - Single View of Risk • It’s a common view that leverages risk aggregation and risk visualization techniques and is shared across all stakeholders internally and externally.

6. Definition - Single View of Risk • To create the single view of the risk, insurers must leverage clean/complete transaction and external data sources, various advance geo/location tools and risk analysis tools.

7. SMA Top 10 Imperatives for Insurers Single View of Risk Aligns to 5 SMA Imperatives Leverage Next-Gen Technologies Transform the CUSTOMER Experience Evolve RATING with PRODUCT CONFIGURATION Capabilities Redefine the Impact of CORE Accelerate Paper to DIGITAL Transformation Commit to Dynamic DISTRIBUTION Capabilities INNOVATE for ADVANTAGE Take UNDERWRITING Differentiation to the Next Level Optimize CLAIMS beyond the Transaction Claims Analysis Extend ANALYTICS across the Enterprise Profitability Analysis Leverage Next-Gen Technologies Source: Strategy Meets Action 2013

8. Big Data – Power of Multiple Data Sources Unstructured Corporate Data Transaction Data External Datasets Embedded Chips and Sensors Social Media / Web Source: Strategy Meets Action 2013

9. Key Lines of Business for Risk Data & Tools Percent of Respondents Citing as Key LOB Source: SMA Research 2012

10. Most Important Methods of Enhancing Data Source: SMA Research, Data and Analytics 2012, n=165

11. Innovative Advantage of Surrounding Big Data with Advanced Tools Geo-coding Data cleansing Risk analysis Business Intelligence Visual mapping Source: Strategy Meets Action 2013

12. Today’s Presentation • Thinking Strategically about Risk • Claims Evolution • Examine the Marketplace – SMA Research • The State of the Possible • SMA Call to Action

13. The Future Claims Value Chain Current Emphasis Future Emphasis Loss Restoration Loss Mitigation Loss Prevention Loss Control (all lines) Safety Engineering Programs Wellness Programs Disaster Preparedness Programs Real-time Monitoring & Alerts Mobile Enablement FNOL Coverage Verification Assign-ment. Investig- ation Loss Reserving Negotiation & Settlement Litigation Mgmt Recovery (Subro & Salvage) Fraud Detection Case Management Claim Analytics CAT Management Source: Strategy Meets Action 2013

14. The Future of Claims • Instrumentation/GPS • Safety Engineering • Enhanced Risk Selection • Location based data • External risk data • Analytics • Risk Mgmt. & Loss Control across lines • Social media • External risk data • Wellness focus • Instrumentation/GPS • Mobile access • Claimants • Adjusters • Partners • Disaster preparedness • Improved CAT management Prevention Mitigation Restoration • Mobile adjusters • Automated/Self-adjusting • Fully networked providers • Customer Communications Management discipline • New technologies Source: Strategy Meets Action 2013

15. Today’s Presentation • Thinking Strategically about Risk • Claims Evolution • Examine the Marketplace – SMA Research • The State of the Possible • SMA Call to Action

16. IT Spending by Capability Area 2013 IT Spending Moving Out of the Back Office Front Office Middle Office Back Office Increase Flat (No Change) Decrease Source: SMA Research, Insurance Ecosystem 2013, n=157

17. Top 5 Business Drivers of Technology Investment Percent citing as a key business driver Source: SMA Research, Claims Transformation 2011, n=337

18. Business Capabilities Focus The focus areas … compliance, efficiency and data Source: SMA Research, Claims Transformation 2011, n=337

19. Technology Capabilities Focus Efficiency, service and information are the critical areas of focus Source: SMA Research, Claims Transformation 2011, n=337

20. SMA Next-Gen Technologies for 2013 • 1. Mobile Maturity • 2. Social Media Momentum • 3. Analytics and Big Data Leverage • 4. Collaboration Expansion • 5. Cloud Computing Growth • 6. Telematics Tipping Point Source: Strategy Meets Action 2013

21. Proactive and Reactive Mobile Interactions

22. Data & Analytics for Claims Reporting Claim History Operational Results (Efficiency) Policy Business Intelligence Business Planning Information (Effectiveness) Paper-based Reports Dashboards & Scorecards External Risk Data Spread- sheets Ad-hoc Queries Analysis CAT Models Advanced Analytics Proactive Loss Control & Disaster Mgmt (Transformation) Fraud Advanced Statistical Analysis Analytic Collab- oration Predictive Models Predictive Analytics Vendors Legal Source: Strategy Meets Action 2013

23. Telematics Tipping Point

24. Leveraging Conjoinment Applications Technologies Portals Rules Front Office Connectivity BPM Predictive Analytics Illustrations and e-Submissions Product Management Mobile Data Workflow Middle Office Rating CRM Social Media Underwriting / New Business CCM UXP Policy Administration Claims Back Office Business Intelligence ECM Billing Cloud Source: SMA Research, Insurance Ecosystem 2012, n=126

25. Leveraging Conjoinment Applications Technologies Portals Rules Front Office Connectivity BPM Predictive Analytics Mobile Data Workflow Middle Office Social Media CCM Claims Back Office Business Intelligence ECM Cloud Source: SMA Research, Insurance Ecosystem 2012, n=126

26. Today’s Presentation • Thinking Strategically about Risk • Claims Evolution • Examine the Marketplace – SMA Research • The State of the Possible • SMA Call to Action

27. SMA Definition of Innovation RETHINK REINVENT REIMAGINE RETOOL idea ROLES, PRODUCTS, SERVICES,AND/ORPROCESSES … TRANSFORMS CUSTOMER/EMPLOYEE EXPERIENCE AND/OR ACHIEVES GAME-CHANGING RESULTS …

28. Innovation in Action Travel Industry

29. Innovation in Action Travel Industry

30. SMA Business Value Maturity Matrix OPERATIONAL Innovate Excellence Competitive Advantage Optimize Modernize Effectiveness Typical End Point Replace+ Maintain Status Quo COMPETITIVE POSITIONING Laggard Mainstreamer Mover Market Leader Source: Strategy Meets Action 2013

31. Today’s Presentation • Thinking Strategically about Risk • Claims Evolution • Examine the Marketplace – SMA Research • The State of the Possible • SMA Call to Action

32. SMA Business Value Maturity MatrixClaims Moving Beyond the Transaction Competitive Advantage OPERATIONAL Innovate Excellence Claims CAT Capabilities Optimize Modernize Effectiveness Typical End Point Replace+ Maintain Status Quo COMPETITIVE POSITIONING Laggard Mainstreamer Mover Market Leader Source: Strategy Meets Action 2013

33. Claims Transformation:Positioning for the Future The content in this deck is the property of Strategy Meets Action and a copy has been made available to attendees of the PCS CAT Conference April 2013. Do not distribute externally. Karen Furtado Partner Strategy Meets Action kfurtado@strategymeetsaction.com 978.239.2741 Twitter @karenmfurtado