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AUGUST 2017

Digital Transformation – The new-age InsurerSamuel Tayengwa Senior Product Consultant

Agenda

The local insurance industry

The international insurance industry

A powerful solution exists

Where to from here?

An Intro to TU Africa: Driving Information for Good

Leading provider of risk and information solutions:• 100+ year history in SA• Listed on the NYSE in 2015

We leverage state-of-the-art global data and analytics platforms/IP to accelerate the ability to provide insights and value-based outcomes to clients.

We want to be a true strategic partner to our clients:• solving complex problems and• co-creating value

We are committed to driving ‘Information for Good’ for our clients, our consumers, and our communities.

Our Global Presence

PropertyConsumer Commercial AutoInsuranceEIR

30 8 #1countries countries in Africa position in South Africa,

Hong Kong, India

Unique Data-sets

Strong Capabilities

• SHAPE/Hadoop - Big data platforms• PRAMA - Analytical & insights engine

• DecisionEdge® - Front-end Decisioning platform• Analytics - Unique algorithms & scores

Insights ActionsDataIngest Analyze Visualise Collaborate Fulfillment Score Decision

An Intro to TU Africa: Data & PeopleA

fric

a D

ata

Ass

ets

Marketing

Contact (Credit & Non Cred)

Data Strategists

Data Scientists

Statisticians

Machine Learning experts

Solution Consultants

Marketing Specialists

Risk Specialists

Fraud specialist

Geospatial

Geocoding

Property Variable

Peop

le

700+ Associates

Insurance

Insurance Claims

Insurance Underwriting

Property data

Deeds & Bonds

NAD

EIR Data baseCommercial

Registered Companies

Trade Data

Trade References

Company Operations

Enquiries

Default Data

Civil Court Judgments

Business Rescue

Bank Codes & Banking History

Notarial Bonds

Trust Data

Auto

Vehicle master

Auto valuation

Vehicle Finance

Consumer

Payment Profile

Consumer Header

Enquiries

ID Verification

Contact Data

Default Data

Civil Court Judgments

Debt Counseling

QVS

Biometrics - Voice

KenyaRwandaZambiaBotswanaNamibiaSwazilandSouth Africa

*Only SA & Kenya

The local insurance industry

Is the local insurance industry dragging its feet?

© 2016 TransUnion LLC All Rights Reserved | 7

Market Context: Fintech in sub-Saharan Africa

Mobile wallets key to fintech landscape

Flourishing start-up sectorFormal fin. services remain under-penetrated

Increased direct backing by major players

80% of adults in Africa do not having access to formal or semi-formal banking services

Increasing opportunity to leverage high penetration of mobile wallets and remittances into other financial services, including credit

Mobile Money

LendingStart-up

AcceleratorSME

Working Capital

Top 10 Global Player; 1M

customers and $100M in 1st 9

months

P2P Lender focussed on

SMEs; $100K loans per day

Global network of industry

focused start-up accelerators

Alternative funding source

for WC

Finnovating for Africa: Exploring the African Fintech Startup Ecosystem Report 2017

• Payments and Remittances- 125

• Lending- 65• Other- 110

• South Africa- 94 • Nigeria- 74• Kenya- 56• Other- 76

300+ Africa Fintech Start-ups in last 2.5 years

The local industry leaped forward in recent months, but will this be good enough to catch up with international best practise?

Overview and the local industry in perspective

Investment into FinTech and InsurTech increased by 117% between 2014 and 2015

At the moment, less than 5% of insurance is purchased online in South Africa

Less than 15% of P&C insurance can be purchased online a ~R500 billion market

28% of the population are millennials, presenting a significant opportunity

Low ranking in consumer perception

Overview and local industry in perspective (cont.)

IOT technology adoption rate slow

Estimated that 90% of data used in the application process is captured manually and the validation of this data is limited with outdated and expense intensive quality assurance processes are still being applied to “mitigate” the risks associated with poor data capturing

High level of sophistication around pricing and risk selection

Lagging international benchmark for online use

Low adoption rate of UBI (telematics) ~ < 10%

The international insurance industry

Do we stack up against international insurers?

REGRETTABLYNOT…

Here’s a couple of things international markets are doing that we should definitely work towards:

Internationally, the picture looks very different

80% of carriers provide online self-service

More than 70% of all online quotes generated in the US in 2015 were created online

More than 20% of insurance was purchased online – increasing every year

Up to 50% improvement in operational expenses has been experienced by businesses that have implemented online strategies

Internationally, the picture looks very different (cont.)

Significant improvement in claims processing time and associated costs resulting in healthier combined ratios and happier customersQuoting and underwriting processing time reduced by as much as 60%Insurance penetration remains the highest in the world and is set to increase as digital channels allow easier and broader access to insuranceOperational efficiency and cost saving generated by process automation has created capacity for insurers to innovate in improving the customer experienceThe use of digital channels to deliver gamified training content ensures continuous skill development translating into better advice and coverage for customers

A powerful solution exists –we just need to make it work for us

EIR DB

1.48 B

Hosted

TU

Acquisition Plan

Employee

Count

Company Financials

14 K

Qualification Data

Judgments1.2 M

Commercial Header

5 M

Active Commercial

1.5 M

Address

4.3 M Auto Valuations

7.2 M

Insurance Claims9.7 M

Consumer

Auto

Health Telco

Commercial

Insurance

Verified ID

33 M

We can respond promptly and decisively through access to some of the best data in the world

Property Valuation Enquiries

2.7 M

Registration Information

4.5 M

Contact1.4 M

Insurance Policies

4 M

Deeds15 M

NAD9 M

Vehicle Master19 M Auto

Finance 3.2 M

TrafficFines

Medical Aid

Policies Contact21 M

Consumer Header51 M

Payment Profile

21 M Defaults3.4 M

Payment data

Home Affairs

Notices35 K

Prefill demo - underwriting a personal vehicle

Insurer

Data pre-populated for insurance decisioning*

<Name> Mary<Surname> Smith

<Registration Number> WXY514 GP<Address> 52 Corlett Drive Illovo

Sandton 2196<Vehicle Make> BMW <Vehicle Model> 320i<MM Code> 12345678<Loss Ratio Score> 680

<Lapse Model Score> 680<Income Estimator> R7500

<Claims last 3 years> 3<eNatis driver license> Yes

TransUnionPremium decision

calculation

Business Rules and Rating Engine

Quote

Match to TransUnion

data

* Data returns indicated above for illustrative purposes only

ID, Name, Surname, Registration Number Agent inputs

minimum data

Incomplete Asset

Information

Poor Policy Demographics

Incorrect Vehicle Data

POLI

CY

DAT

A

INSU

RA

NC

E PO

LIC

Y LI

FEC

YCLE

Quoting

Claims

Underwriting

Renewals

Call Centre

Broker

Self Service

Sources of DataOperational Efficiencies

FraudDetection

IMPA

CTS

Improved Claim Ratios

Underwriting Profitability

SAICBIDSHEALTHTELCOAUTO

INSURANCECOMMERCIAL CONSUMER

Solutions exist to increase the pace of adoption

• How we have helped…

Pace of change is relentless…

New entrants entering the market have digitisation as

the foundation of their strategy .

Business processes are architected around automation, integration

and agility

Significant investment being made by established insurers to digitise acquisition processes, enhance self service and reinvent claims processing

Traditional insurance is set to change forever, finally in favour of the consumer

Where to from here?

Next steps – combining data and technology to solve consumer issues

Automated on boarding processes to increase relevance

Fraud mitigation only possible through investment in technology e.g. machine

learning models have a 5:1 false positive ratio in predicting content fraud

Improved customer experience through true omni-channel capabilities being

widely adopted

The ability to combine structured and unstructured data e.g. web scraping essential for omni-channel and fraud

objective improvements

Next steps – turn data into valuable insights (cont.)

Improvement in profitability through better pricing and risk selection,

reduced operating expenses, reduction in fraud

‘Internet of Things’ data and devices set to increase exponentially allowing first notification of loss and response to a

claim to happen in real time

Increased relevance of telematics in driver education and rewarding safe driving,

reducing distracted driving and improving emergency response time in emergency situations aimed at improving road safety

in South Africa

Access to real-time businessintelligence through new data processing

and analytical tools, which creates a significant competitive advantage by

allowing insurers to quickly identify and react to possible threats and opportunities

Next steps – turn data into valuable insights (cont.)

Growing popularity of P2P insurance e.g. Lemonade, set to threaten

traditional insurance principles and processes

Social media platforms set to re-shape traditional distribution channels through

AI technology like Chatbots

Transformation from a grudge purchase to a practical and engaging risk management

solution partner in a world where risk complexity and exposure is evolving faster

than the solutions to mitigate them

Expanding use of technology to pro-actively manage risk, reduce the impact of a loss after it has occurred and convert the learnings into engaging solutions aimed at

improving consumer knowledge

INFORMATION FOR GOOD

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THANK YOU