A F R O S T & S U L L I VA N W H I T E PA P E R

Digital Transformation
in the Insurance
Industry
How Technology is Disrupting the
Market, and What You Can Do to
Prepare for the Change

Commissioned by Samsung Electronics America

Contents
Introduction 3
Technology is Changing the Insurance Industry 3

Mobile is the New Normal 4

Three Industry Examples 4

InsurTech 5
What It Is and Why It Matters 5

Wearables Make Data Actionable 9

Three Industry Examples 9

Augmented and Virtual Reality on the Horizon 10

Three Industry Examples 11

Best Practices for InsurTech Success 11

Mobile Phones and Tablets 12
Wearables 12
Virtual Reality 13

Conclusion 14

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Introduction
Technology is Changing the
Insurance Industry
The number-one priority for insurance carriers today is growth—and one of the
most effective ways to enable it is through the use of innovative technologies, part
of a new wave in the industry called “InsurTech.” But as customers’ demand for
mobile digitalization are increasing, the insurance industry is wrestling with aging
technology and struggling to catch up with other financial services industries as
well as mobile-savvy consumers. While new technologies are changing the industry
for the better, insurance companies must know exactly what tools are available
to them—and how to implement them to improve productivity, boost revenues,
and maintain security and compliance. For instance, given the ubiquity of mobile
devices today, insurance customers expect firms to leverage mobile’s power to
process their claims and insurance requests in real-time, creating a smooth and
frictionless experience. Insurance companies that do not meet those needs will lose
out to the ones that do.

This paper will look at how technology is changing the current insurance industry,
and into the future, with emphasis on what the new insurance marketplace will
look like; discuss how insurance companies can thrive in a changed industry;
examine the ways in which InsurTech is improving the market, with a focus on
mobile (apps, geo-location, in-field service), “wearables” (real-time response,
continuous biometric monitoring), and AR/VR (training, back-office support for field
agents); and offer best practices recommendations for choosing a provider and
implementing the new technology.

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Mobile is the New Normal
Smart phones and tablets are having a huge impact on how insurance firms market
and sell their policies, assess risk, set pricing, and manage and settle claims.
According to Deloitte, 77% of buyers under 35 would like to purchase insurance
through their smart phone; surprisingly, fully 57% of people over 55 would like to
as well. Already, 19% of consumers use their smart phone when shopping for auto
insurance according to the Insurance Research Council. Smartphones will continue
to play an instrumental role in the future of insurance as the industry undergoes a
digital transformation.

82% of global insurers

say that AI-driven
automation will be
seamlessly embedded
into every aspect of their
business by 2021.
Source: Accenture

Three Industry Examples

• Homeowner’s/Casualty: Inventory management is one of the most difficult
issues after a fire, hurricane or other loss event. Regardless of whether a
homeowner’s policy covers the retail replacement value or actual cash value of
lost items—everything from furniture to appliances to clothing—most people
don’t maintain a complete record of what they owned, and have no real way of
knowing precisely what was lost. Mobile devices—complete with cameras and
loaded with inventory software—can help by making it easy for homeowners
to keep an ongoing, always up-to-date record of everything they own. Links
to outside data sources can help users maintain replacement costs or current
value information, so that they can receive their maximum allowable benefit
very soon after their loss event.
• Automotive: Armed with smart phones and tablets, claims adjusters can get
into the field to assess damages and create incident reports minutes after
an accident happens, ensuring payouts and repairs are based on high-quality

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 information, while quickly getting customers back on the road—whether in their
old vehicles or in a temporary or permanent replacement model. Cameras can
detail the actual damage, as well as capture evidence to help determine who
was at fault; apps can ensure adjusters are entering all data into a corporate
platform, supporting any necessary back-end integrations and meeting all
compliance needs.
• Health: As doctors continue to focus on bringing care to patients “where
they live,” mobile devices make it easier for them to access patient data, track
current treatments and reactions, and manage caseloads from anywhere—
their office, a clinic or hospital, or at home or on the go. By loading apps and
software onto smart phones and tablets, physicians get access to the same
information they’d have in a traditional clinical setting, from anywhere—and
they know that any updates or changes they make will immediately be entered
into the system and available to colleagues as soon as necessary. Mobile
devices can also help patients manage their own care, by offering apps to
improve overall health, support lifestyle changes, manage chronic conditions
and track follow-up care.

More than half of

insurance customers want
to conduct their research
and get quotes electronically
Source: PwC

InsurTech
What It Is and Why It Matters
Like many markets, the insurance industry is facing dramatic changes to the way
business gets done, propelled largely by new technologies that are empowering
users with more relevant information whenever they need it. This automation, in
turn, enables better, faster and more effective decision making and workflow, as
well as an improved customer experience. Collectively, these new technologies are
referred to as “InsurTech.” The relevant tools available are wide-ranging, but some
of the biggest improvements are coming from mobility (devices and apps), wearables

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 T O P 10 T R E N D S S H A P I N G I N S U R A N C E I N 2016

Increased Use of Internet Focus on Gamification

1 of Things By Insurers 6 of Processes

Auto Insurers Shifting

Increased Demand
2 Toward Usage-Based
Insurance
7 For Cyber Insurance

Using Big Data

Emergence of
3 to Improve Claim
Processing Capabilities
8 Peer‑To‑Peer Insurance

Entry of Non-Traditional Usage of mHealth Apps

4 Firms in Insurance 9 by Insurers

Increased Use of Aerial Focus on Customer-

5 and Digital Imagery 10 Adherence Apps

Source: Capgemini, 2016

and augmented and/or virtual reality technology that is upending the way insurance
is sold, customers are supported and claims are handled.

Of course, the insurance industry has been leveraging technology for years, but the
benefits delivered from today’s innovative tools can be dramatic; they include online
quote development and policy management, individual risk development, digitized
policy management and data capture, and automated compliance processing, and
span all aspects of the industry. They are also impacting those areas of the markets
that may not be directly affected by new tech, but which are nevertheless getting
caught up in the broader global shifts. And the new technology is caught up in
a sort of chicken-and-egg cycle, in which customer demands are requiring that
companies change how they do business, which drives new customer experiences,
which then lead to even newer demands in the future.

Indeed, according to recent research by Deloitte, 49% of insurance customers are

willing to share health data, 45% are willing to share home-related data and 38%
are willing to share auto-related data with their insurance companies. In fact, the
confluence of technology and insurance seems to be something of a given in the

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 To date, companies have invested
$4.74 billion in InsurTech
Source: InsureTech Connect

Key Criteria for Success in

the Changing Insurance Industry
• To survive the coming technology disruption, insurers must adopt a
customer-centric approach, moving from enterprise-driven to user-
driven solutions. By focusing on their employees’ and customers’ pain
points—and developing user-driven technology solutions that allow them
to remain relevant—insurers will gain a better understanding from the
overlooked front lines of customer interaction.
• Insurance companies are weighted down with legacy technology; cyclical
focus on earnings, existing profitable lines, and short-term balance sheets;
siloed employees; and cautious and deliberate processes. To succeed in an
ever-changing global marketplace, they must instead deliver innovation at
the speed customers demand.
• Pay close attention to the value of customer data. Customers, especially
Millennials, are willing to share their data in exchange for lower rates.
Thanks to device ubiquity and the Internet of Things, companies have
access to more relevant data than ever to better understand and manage
risk. Insurers that successfully leverage data and analytics will be able to
convert that information into insight faster than their competitors—and
attract more customers, which in turn builds a richer data source, creating
a positive cycle.
• All roads converge at the intersection of mobility and optimized
experiences. Smartphones help firms respond to disruption, scale quickly
and build their data pipeline. By focusing on the user experience in
mobile, insurers can remove frustration, increase customer interaction,
boost employee productivity and build loyalty inside and outside the
organization.

All rights reserved © 2017 Frost & Sullivan 7 frost.com

minds of many consumers: a 2015 Capgemini survey revealed that almost a quarter
of consumers worldwide would be willing to purchase insurance from a technology
vendor, rather than a traditional insurance company.

InsurTech comprises a number of business areas, including:

• Customer Engagement: CRM, price determination and aggregation, online

purchasing, omni-channel support services and digital claims processing.
According to a survey by PwC, nearly 75% of insurers see an impact on the
customer experience from their technology investments.
• Compliance and Regulation: Identification processes, automated reporting
and digital policies and contracts.
• Data and Analytics: Data management, real-time risk assessment,
personalized pricing and customized underwriting. According to PwC, almost
70% of insurers are using technology to leverage existing data and analytics to
generate deep risk insights.
• Internet of Things: Automotive telematics, sensors and beacons, asset
tracking, and home and auto security and real-time information. Almost
40% of insurers are investing in new technology to enable the business with
sophisticated operational capabilities, according to PwC.
• Advisory Services: Automated asset management, mobile office, digital
savings plans and lifecycle investment strategies.
• Healthcare: Biometric analysis, patient compliance tracking, genetic data and
preventative care.
• Information Security: Fraud detection and mitigation, cyber insurance, risk
management and privacy policies and loss-prevention services.

Many of the initial changes in the insurance market have been initiated by small
upstart firms looking for an edge against more traditional players, which are
typically slower to adopt new technology due to the size and complexity of their
organizations. But those firms must now get into the InsurTech game, or they will
find themselves losing considerable market share to both newer competitors, and
old-guard participants that are quicker to adapt to the changing business.

All rights reserved © 2017 Frost & Sullivan 8 frost.com

 Peer-to-Peer Insurance
Disrupts the Market
A new offering called “Peer-to-Peer,” or P2P, insurance is impacting the
market by turning the traditional business model on its head. Think of P2P
insurance as essentially a credit union, but for insurance. People form a
group—sometimes one they create, other times by joining one on social media
or via other online options—and effectively underwrite themselves and each
other. Any pay-outs come first from that cash pool, but if there are overages,
the insurance company—which typically charges a flat fee for participation—
steps in to make up the difference. If there are any leftover monies, they
are distributed to the group on a set schedule. The benefits come from the
elimination of conflict between the insurance company’s goals and that of its
customers. According to the Insurance Research Council, 40% of consumers
considered purchasing insurance while participating in the sharing economy.
So while the impact of this new model has yet to be felt across the market, the
potential for disruption is high.

Wearables Make Data Actionable

Wearables like smart watches and biometric trackers can help insurance companies
stay up to date on activities that their customers engage in, to better monitor their
behaviors and alter pricing and benefits accordingly.

Three Industry Examples

• Homeowner’s/Casualty: Smart watches can help home owners make better
decisions about their use of safety devices, electronics and appliances by
tracking the environment in the home and its effect on the owner’s health
and safety. Better still, they can help firms track and contain certain risky
behaviors that might normally trigger a higher premium or reduction in claims
benefits—and then use that information to alert the customer that her actions
have consequences, and potentially try to steer her in another direction. For
example, if a homeowner climbs on her roof to clean out the gutters in late fall,
her smart watch’s geo-location capabilities could let her insurer know that—
and the company could send her a message suggesting she take specific safety

All rights reserved © 2017 Frost & Sullivan 9 frost.com

 precautions or hire a contractor to do the work, resulting in fewer accidents,
and fewer claims payouts.
• Automotive: Although Google Glass was a bit of a bust, other camera-ready
wearables could transform the auto-insurance industry by capturing and storing
video footage of accidents in real time, ensuring companies know exactly who
was at fault and what damage was incurred as a result. Meanwhile, health and
fitness trackers can tell investigators if there was a medical event that preceded
the crash, which could impact fault determination and help deliver needed care
to the actual people involved in the incident—as well as suggest ways for them
to avoid similar situations in the future.
• Health: Biometric trackers, whether worn on the body or clothing, can deliver
valuable medical data to doctors and nurses about their patients. This is
especially valuable for people with chronic conditions that require life-long
management. For example, diabetics can use wearables to track not just
their insulin levels, but also their eating and exercise habits, thereby helping
them make connections between the two. They can also send alerts when
an injection is due, or when they missed a meal, as well as other medical-
management best practices. Physicians with access to that same information
will gain deeper insights into what their patients are actually doing on a daily
basis, rather than what they (often in accurately) self report.

Augmented and Virtual Reality on

the Horizon
Augmented reality (AR) and virtual reality (VR) tools may seem like playthings
for gamers and kids, but they have a big role to play in the insurance industry of
the future.

The market for VR and 2015

AR devices will increase 2.5 M
from 2.5 million in 2015 24 M
to 24 million in 2018 2018

Source: CCS Insights

All rights reserved © 2017 Frost & Sullivan 10 frost.com

Three Industry Examples
• Homeowner’s/Casualty: Insurance underwriters must be well educated on
everything about the properties and people they are insuring. Anything that can
help them better understand everything from HVAC installations to lifecycle
changes and risk-taking behaviors will help them do their jobs better. Using AR/
VR for training and education purposes allows companies to make sure their
sales people and adjusters are skilled in assessing and analyzing a variety of
potential pitfalls, and then make recommendations to their employers and their
customers about how making a few simple adjustments could lower their rates
by improving their health and safety.
• Automotive: Using VR for driver training could have significant positive
impacts on overall accident and injury rates—and insurers can be among the
first to embrace this new reality. By encouraging customers to learn better
driving habits and techniques, firms will lower accident rates, which will in turn
lower premiums and claim filings. Similarly, insurance companies could require
customers to take a simulated driving test before issuing or renewing a policy,
allowing them to tailor rates and coverage to the individual rather than an
actuarial table. And the tech can help underwriters learn about the latest and
greatest car and truck models on the road (and even rare older models, too), so
they can better evaluate risk and reward.
• Health: Continuing medical education (CME) is often perceived as a necessary
evil by doctors, nurses and other caregivers. While the information conveyed in
such classes is often critically important, the training itself takes practitioners
away from their patients, often for days. With AR/VR technology, many intricate
procedures can be trained remotely—using gamification to help surgeons learn
a new techniques, say, or train radiation techs on a newer, better machine. AR/
VR can also improve telemedicine by taking the virtual encounters to the next
level, making the experience better for both the doctor and the patient, and
boosting outcomes in the process.

Best Practices for InsurTech Success

Insurance companies that want to deliver the best experience for their customers—
and increase revenues and market share in the process—must embrace new
technologies. Looking at the three key categories we’ve discussed in this paper,
here’s what to focus on for each:

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Mobile Phones and Tablets
1. Security: Insurance companies are especially vulnerable to security risks, both
when it comes to providing the most efficient software and hardware, and in
being able to protect corporate assets and customer information from digital
threats.

Samsung Knox can

keep all transaction data
and client information
safe and secure on mobile

2. Customization: Higher accuracy by claims analytics, underwriting analytics

and real-time loss control is critical when managing InsurTech.
3. Workflow: It’s important to remotely manage devices and other equipment to
gain control and make workplace safer.
4. Customer Service: Improve the customer experience by delivering faster
responses from anywhere, anytime. Use electronic signature capabilities to
simplify the buying process, and remote data sharing to make it easier for
agents to see what the customer is experiencing from anywhere.
5. Voice and Text Messaging: enable better communication between the
insurer and the insured.

Wearables
1. Apps: Mobile apps can help companies identify and define new customer
segments with the help of data analytics from wearables. This will allow them
to offer specialized policies on an immediate basis—say, when a customer is
about to go skydiving, or is embarking on an international trip.
2. Biometric Tracking: Insurers can use body sensors to monitor health and
collect valuable customer data for health, fitness, driving readiness and so
on. Firms can then use this and other data to more accurately calculate life
insurance, healthcare, casualty and healthcare premiums.

All rights reserved © 2017 Frost & Sullivan 12 frost.com

 3. Payments: Claims adjusters and processing agents can instantly and remotely
make a payment on a wearable device.
4. Alerts: Making customers aware of potential hazards can save them grief
and the firm money. The claims-management process can be initiated when
notification is sent in case of a mishap.
5. Geo-location: Location services drive accuracy and understanding of on-site
information.

Samsung Pay makes it easy

for insurers to receive
premium payments and pay
claim refunds, all on a mobile
device with built-in security.

Virtual Reality
1. Real-time Data Collection: Claims adjusters can use a 360-degree camera
and AR/VR to better capture information and calculate loss.
2. Education: Agents and adjusters can get an immersive experience in homes,
vehicles and other sites without ever leaving the office. Customers can learn
more about risks, benefits and potential hazards to keep premiums and
claims low.
3. Training: Especially useful for corporate clients that need to ensure their
employees are up to date on all safety protocols and procedures.

The Samsung Gear VR ALERT

allows underwriters to
perform inspections
remotely, bringing
significant cost savings ALERT

All rights reserved © 2017 Frost & Sullivan 13 frost.com

Conclusion
InsurTech is poised to transform the insurance industry across all sectors, including
health, homeowner’s and auto, by leveraging new and disruptive technologies to
change business processes, employee activity and the customer experience. Some of
the most impactful InsurTech capabilities are focused around mobility (smart phones
and tablets), wearables (fitness and health trackers, smart watches, glasses) and
virtual reality (VR). When used correctly, these tools are improving everything from
marketing and sales to setting pricing and adjusting claims—and they are helping
firms increase employee productivity while jumpstarting customer satisfaction in
the process.

As insurance companies begin to evaluate, deploy and embrace InsurTech, however,

they must pay close attention to security, privacy and compliance issues, and
they must engage a vendor that can support those challenges while also offering
intuitive apps for communication, payment and other targeted processes. That
is the only way to ensure that the changes they instigate will help them stay
competitive in an increasingly challenging market—and see success for them and
their constituents.

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 WHAT NEX T?

Learn more about Samsung’s

innovative insurtech solutions:
www.samsung.com/finance

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