Custom InsurTech Solutions Triggers the Transformation Insurance Industry Have Been Longing For

1. WHITEPAPER Decoding Future of Insurance Channelising Digital Innovations to Meet the Evolving Business Needs by Krishna Boga

2. WHITEPAPER | Decoding Future of Insurance TABLE OF CONTENTS Insurance: The Current Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Paradigm Shift: Components, Segments, and Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How Are Technology Innovations Shaping the Insurance Industry? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Role of InsurTech and the Emerging InsurTech Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Why is Collaboration Between Insurers and InsurTech Companies Inevitable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusion: Digital Cementing is the Key to Building the Future of Insurance 02

3. WHITEPAPER | Decoding Future of Insurance INSURANCE: The Current Scenario The insurance industry is witnessing a seismic shift. Insurers worldwide — irrespective of size — have started to step out of their silos and embrace disruptive technology forces to bind customers, partners, agents, employees, peers, and other stakeholders in a digitally connected ecosystem. Although there is no denying that digital-born competitors are one of the reasons for this transformation, it is the COVID-19 pandemic that is actively driving the digital enablement for insurance companies in the current scenario. Although the pandemic has come as a rude awakening to the hardships of the contemporary insurance business challenges, it is sure to help insurers find long-term solutions to survive the continuously growing competition. According to a report by Statista , in 2020 alone, global insurance tech companies have attracted investments worth $2.3 billion approximately. Such reports prove that insurers on a large scale are determined to harness technology capabilities to help stakeholders’ fight the challenges that include: Reducing dependency on manual- and paper-based work Eliminating communication bottlenecks for a seamless delivery Ensuring 24*7 availability across the platforms and devices Accessing marketing collaterals and promotional data in real-time Augmenting customer experiences and revive brand credibility The year 2020 is proving to be a turning Experiencing a seamless journey across multiple endpoints point for insurers worldwide, both in losses and opportunities. Leveraging long-term customer relationship benefits 1Statista 2Statista 03

4. WHITEPAPER | Decoding Future of Insurance Statista informs, the insurance industry is to experience a loss of up to $140 Billion in 2020 due to the dreaded COVID-19 pandemic. Let’s briefly analyse what possible reasons could lead to such a loss. Potential global recession creating opportunity rifts Financial implications leading to difficulties in funding Disruptions in the supply chain resulting in operational in efficiency Dampening productivity due to the pandemic effect on the workforce Reducing consumption due to falling customer confidence Inefficient decision making due to unavailability of actionable insights Lack of appropriate measures to mitigate fraud and risks due to cyberattacks The pandemic has highlighted the need to develop resilient insurance business models to unlock fresh opportunities, ensure preparedness for crises such as COVID-19, and build the future of work. Complications due to alterations in regulatory compliance standards Restructuring of protocols impacting tax, trade, and immigration COVID-19 opportunities. True. But the way it is forcing insurers to carve a technology roadmap, the pandemic has seemingly started to turn out a blessing in disguise. has trampled on Inability to manage the crisis and shape response to COVID-19 The time is ripe when insurers must unleash technology potentials to train the workforce and equip them with digital tools and infrastructure to perform the disparate business tasks remotely and efficiently. Companies can lean on digital insurance technologies to develop customer-centric, digital-first strategies. The technologies can further help accelerate policy, claims, and premiums processing, increase customer outreach, enhance brand credibility, reduce costs, gain competitive advantages, and reap innumerable benefits 04

5. WHITEPAPER | Decoding Future of Insurance The Paradigm Shift: Components, Segments, and Processes According to the Digital 2020 report, approximately 59% of the world’s total population (i.e., 7.75 Billion) are active internet users. At the same time, the adoption and usage of smart devices also continue to grow. Given that, it is easy to make out that digital-age customers — who have developed a habit of buying anytime, anywhere — are well informed. They demand 24*7 accessibility and availability, high-level of personalisation, and superior omnichannel experiences. These factors force insurers to restructure processes, components, and segments to fit the new-age demands. In short, it is the digital disruption and advancements in technologies that are driving the shift in the different insurance segments — including life, general, auto, travel, and health — and encouraging business owners to reinvent processes. 3We Are Social 05

6. WHITEPAPER | Decoding Future of Insurance Encouraging business owners to reinvent processes Technologies have given birth to new forms of surveillance and advanced calculation algorithms leading to the shift in components, segments, and processes, concerning the insurance business. With the improved capability to capture, store, analyse, and process data using digital methodologies, insurers can now practice precision while determining different insurance components, including premiums, policy limit, and deductibles. For instance, autonomous cars embed sensors that inform about a particular customer’s braking and accelerating behaviour or if they usually travel through accident-prone areas or on routes with heavy traffic. On the other hand, there are smart home devices that report their activities of daily living. Besides, health monitoring apps and intelligent wearable devices generate regular data on how many calories they burn every day or how many steps they walk. Digital channels help gather data that improves the decision-making ability of underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Shift in Insurance Segments The novel coronavirus has significantly impacted the different segments of the insurance industry. Individuals and organisations are up for debate in many countries, whether insurers should indemnify the losses that occurred due to the COVID-19-led crisis. With measures such as lockdowns and social distancing, the industry’s travel segment almost screeched to a halt. None of the players could avoid the pandemic’s risks, right from specific insurance segment service providers to composite insurers. But in the post-COVID-19 world, the travel insurance market segment is poised to grow at a CAGR (Compound Annual Growth Rate) of 17.4% during 2020 and 2027 to reach $39.9 Billion by the end of the forecast period, informs a recent report . On the contrary, the market for health insurance saw continuous growth. With the COVID-19 pandemic getting rife, governments in many countries suggested that insurance companies design and deliver short-term health insurance products to customers, both insured and uninsured. COVID-19 was alarming for many, and a large part of the population felt the need to have health insurance. The growth trend, therefore, was evident. According to recent research , the health insurance segment will continue to see ongoing growth to reach $2.2 Trillion by 2027. 06

7. WHITEPAPER | Decoding Future of Insurance The Shift in Insurance Processes The shift in insurance processes is driven by the growing connected ecosystem that makes underwriters free from the conventional methods to gather and analyse data before issuing a certificate of insurance to the proposer. Besides the information collected from credit score agencies and other public records, numerous technological advancements such as RPA (Robotic Process Automation), IoT (Internet of Things), and data analytics make actionable insights available for insurance companies. The future of insurance will see digital carriers playing a pivotal role. Insurers will automate processes, and virtual brokers will close the deal. Technologies help insurers augment operations’ efficiency, including agent and customer onboarding, policy administration, underwriting, policy issuance, premium calculation, and claims settlement. Amidst progressive digitisation, maturing markets, and trampled economies, and of course, continuously changing customer preferences, digital technologies give insurers a reasonable fidelity to disrupt the conventional business model and accept the logical shift to unravel the power of agility and evolve persistently. 4Allied Market Research Report 5Data Bridge Market Research 07

8. WHITEPAPER | Decoding Future of Insurance How Are Technology Innovations Shaping the Insurance Industry? The insurance industry has long been infamous to be living in silos. Insurance companies mainly focus on earning premiums and then using the earnings for making diversifies investments. The focus is still the same, but the approaches, methodologies, perspective demands significant alterations. Insurance companies, with conventional business models, have constantly been facing problems and challenges due to: Paper-based documentation process . . . . . . . . . . . . . . . . . . . . . . . . . . . Continuously shrinking revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . Manual business tasks performance Ineffective customer service response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inappropriate measures to retain customers Delayed policy issuance and claim cycle times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increasing fraudulent claims Non-optimisation of enterprise-wide resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inefficient underwriting capabilities Broken experiences for stakeholders 08

9. WHITEPAPER | Decoding Future of Insurance Albeit digitisation did help many insurers gain new ground, but the adoption rate was comparatively slow. And then COVID-19 happened, perhaps to act as an innovation catalyst for many insurers and accelerate the pace of digital adoption. Advancements in technologies help insurance companies forge new business models and design new products and services to meet the continuously changing market demands with agility. The insurance market landscape is changing at a breakneck speed. Insurance services providers must prepare to serve right the mobile-heavy markets and tech-savvy customers. With the increasing smartphone usage, customers are becoming less dependent on brokers, agents, and partners and want services and product accessibility at their fingertips. For instance, they use price comparison sites to compare policy prices and do their research even on social media platforms before buying a policy. Social media platforms are gradually turning out to deliver customer satisfaction besides promoting new insurance products and services. Customers use different platforms to communicate with brands and even lodge complaints. According to a report by Convince and Convert , 42% of customers expect a reply within an hour and 32% in 30 minutes. A report published by PwC has some surprising results that give new insights on why insurance companies should leverage digital technology innovations to serve digital natives. The report informs that approximately 70% of customers want to use an app to buy insurance policies, and over 71% use some form of digital platforms insurance-related research. to do their Opportunities in insurance are growing, and integrating emerging technologies with the legacy business systems and processes can help insurers grab them. As the new developments unfold for the insurance market, it is apparent that early digital adopters will not only gain operational excellence but will become the market leader in the years to come. 09

10. WHITEPAPER | Decoding Future of Insurance Role of InsurTech and the Emerging InsurTech Trends InsurTech is all about harnessing technology innovations to feed data-driven growth, create a hybrid insurance business workforce, and deliver improved customer experiences across endpoints. The term derived by combining insurance with technologies, InsurTech enables insurers to consolidate the fragmented environment through apps and centralised dashboards that facilitate improved management and real-time monitoring. According to World InsurTech Report 2020 , 67% of insurers, having a sizeable market share, believe insurance technologies will help them revamp customer experiences, and another 37% think they could forge innovative business models. The following are some of the vital InsurTech trends that play a critical role in helping the insurance services providers carve new roads to growth and secure a bright future. Robotic Process Automation (RPA) Automation is the key to streamlining insurance processes and driving productivity across the enterprise. Leading insurers collaborate with InurTech companies to leverage the RPA technology and build an intelligent digital workforce or, said more appropriately, a hybrid workforce to perform diverse tasks across Businesses can create, design, and train bots to simulate human behaviour and execute tasks — right from document gathering, verification to issuing policies and settling claims — remotely or locally. RPA is the technology that enables business owners to automate mundane, rule-based tasks and allow the human workforce to deliver value to customers. the different stages. 6Convince and Convert 7PwC 8Capgemini 10

11. WHITEPAPER | Decoding Future of Insurance Blockchain From nurturing cryptocurrencies to enabling hyper ledgers, blockchain has gained traction across industries, including insurance. It allows insurers to build decentralised, interoperable platforms that encourage accountability, transparency, and security. Insurers lean on the technology to make a shared space where stakeholders can instantly reach a consensus concerning an opportunity. It helps create smart contracts that support to build strategic initiatives, avoid fraudulent claims, eliminate common problems such as data duplication, and improve complete policy administration. Blockchain is gaining traction as it helps reduce overall operational costs, attain operational and performance excellence, and, most importantly, deliver value and enriched experiences to customers. Data Analytics Using digital tools to monitor and analyse customer behaviour, build predictive capabilities to anticipate demands, and design relevant products and services is becoming a standard norm these days. It is data analytics that helps insurance companies achieve such a level of intelligence. Strategizing around analytics means turning enterprise-wide data into the most critical business assets and securing actionable insights controlled, accurately identified, and rightly prioritised. Insurers can lean on analytics to mine data coming in from different sources. With valuable and real-time insights readily available, they would be able to make result-oriented business decisions, improve fraud detection, and open new doors to innovation. 11 11 that are well 11

12. WHITEPAPER | Decoding Future of Insurance Cloud Computing Cloud provides mobility, which is key to standing tall to the expectations of digital-age customers. The technology helps insurers make their business available 24*7 and across all platforms. Besides, companies also consider it the technology that enables insurers to flourish in the DevOps (Development + Operations) culture and practice agility and scalability at full scale to ensure instant response to the continuously changing customer preferences and market trends. Developing and deploying new innovative insurance solutions using the latest technologies becomes possible with the cloud, which significantly time-to-market. In the years to come, cloud computing will essentially help insurers seek Everything-as-a-Service, necessary towards cutting IT costs and reducing infrastructure requirements for insurers. shortens the which is considered Artificial Intelligence AI has grown to become one of the essential pillars of digitisation of insurance. The technology leverages machine learning (ML) and natural language processing (NLP) technologies to help insurance service providers observe and analyse customers’ behaviour, needs, and demands. According to McKinsey , if AI capabilities are 100% applied, it will help the insurance industry reach an annual value of $1.1 Trillion. AI can critically improve sales and marketing initiatives, mitigate risks and losses, manage and monitor data efficiently, and immensely. Insurers are yearning to implement AI capabilities to deliver economical, tailored, and meaningful solutions to customers. 12 improve underwriting 9McKinsey 12

13. WHITEPAPER | Decoding Future of Insurance Internet of Things (IoT) It is IoT that backs the connected ecosystem and make real-time data accessible to insurers. In short, IoT has significantly improved the data-collecting capability of insurers. For instance, advanced cars consist of telematics devices and sensors, making it convenient for insurers to restructure the premiums based on regular driving habits. In many cases, customers want to use devices embedded with such intelligent tools to help reduce premium costs personalised pricing. and pursue Conversational Chatbots Another technology innovation that is enabling insurance providers to deliver customer satisfaction is AI-enabled conversational chatbots. With cognitive capabilities, AI-enabled process data intelligently and evolve as they learn. The chatbots solutions offer human-like conversational experiences while answering customers’ queries concerning policies, plans, prices, coverage, benefits, and more anytime and from anywhere. An article in FinTech Magazine chatbots powered by AI will help generate savings worth $8 Billion by 2022. They essentially help reduce the data processing time, provide apt resolutions to customers’ queries, and deliver customised experiences. chatbots informs that 13 13

14. WHITEPAPER | Decoding Future of Insurance Why is Collaboration Between Insurers and InsurTech Companies Inevitable? No one size fits all, and the fact goes true for digital insurance solutions. Insurers worldwide are approaching InsurTech companies intending to find a partner, which can advise them on adopting the right technologies and building robust digital transformation strategies. InsurTech services providers help mould technologies to suit the specific business needs of insurers. According to a report by Capgemini , over 96% of the insurers believe that collaboration can help them stay ahead of the curve. The following are some of the instances concerning insurance companies’ outcomes while collaborating with InsurTech services providers. 80% Reduction in integration upgrade time 3X improvement in response times reduction in policy cycle times from months to weeks 100% over Automation of agent/ customer onboarding process reduction in 50% compliance with regulatory protocols manual-dependent tasks Kellton Tech, for instance, is one of the world’s leading InsurTech services providers, which has been driving end-to-end transformation in insurance companies globally. Insurers have continuously leveraged our domain expertise, industry-grade developers, advanced tools, ready-to-deploy infrastructure, and lean business approaches to ride the digital wave with the utmost confidence. From decision-support systems, mobility solutions, agent-onboarding solutions to connected partner ecosystem and self-service portals and pursuing integration services, collaboration with InsurTech companies is key to developing custom insurance software solutions. 10FinTech Magazine 11Capgemini 14

15. WHITEPAPER | Decoding the Future of Insurance WHITEPAPER | Decoding Future of Insurance Conclusion: Digital Cementing is Key to Building the Future of Insurance Digital technologies bring fundamental forces together to help insurers lead the competition with aplomb, and InsurTech services providers act as aggregators. In the ongoing market scenario, an intuitive frontend or a responsive backend would not suffice. Continuous innovation is the fuel that will drive growth and success. According to a survey done by Deloitte , “By 2024, 33% of the premium volume will come from brand new propositions.” The survey result also informs that the service-based offerings will outperform the product-based offerings in the years ahead and account for 61% of total business generation. Transforming the legacy business suits must be understood with a broader perspective. Offering seamless journey experiences to stakeholders would not be enough to make the future of insurance sanguine. Successful insurers are leveraging services such as API-integration that help businesses function in a digitally connected ecosystem. The fact that robust Integration capabilities allow insurance service providers to share their enterprise data with third parties without any fear enables them to practice full-fledged innovation, thus opening the opportunity door. 15 15

16. WHITEPAPER | Decoding Future of Insurance In an article, Forbes informs that mergers and acquisitions are a key growth strategy for approximately 94% of the insurers. Hence, the sharing economy in the making will see greater importance of mergers and acquisitions backed by technology innovations. In the years to come, insurance business owners create relationship models such as bancassurance to partner with third parties and leverage their database to pursue extension and innovation of products and services proactively. Considering all these factors makes it imperative for prudent insurers to carve out a digital roadmap to churn out maximum benefits from the connected ecosystem. It is digital cementing that can help insurers reach new growth parameters and seal the fissures created by crises such as COVID-19. 12Deloitte 13Forbes North America: +1.844.469.8900 Asia: +91.124.469.8900 Europe: +353.76.604.2716 Kellton Tech is a ‘Born Digital’ technology consulting and services company founded on the belief of ‘Infinite Possibilities with Technology.’ The company has helped startups to Fortune 500 clients build disruptive Digital Transformation solutions and leverage technology as a competitive differentiator for their businesses. Driven by deep domain knowledge and technology expertise, Kellton Tech adds value to client relationships by being as a Trusted Partner. A rapidly growing company, Kellton Tech has been placed four times on the Deloitte Technology Fast 50 India list and has been recognized by Forbes Asia as one among the Top 200 companies in 'Best under a Billion' 2017 List. With operations across the US, Europe, India, and Asia-Pacific, we are consistently on the lookout for the next competitive advan- tage. Please visit our website www.kelltontech.com. General Inquiries: ask@kelltontech.com