Fall Midwest IASA Conference Council Bluffs, Iowa September 12-13, 2019

Today’s presenters Rick Kes RSM Senior Industry Analyst Matt Wolf RSM Senior Industry Analyst

Learning objectives Learn what is causing digital transformation within the insurance sector Learn why insurance companies need to care about digital transformation Learn how insurance companies approach digital transformation

Evolution of digital (1 of 2)

Evolution of digital (2 of 2) U.S. 1975 – 2014 U.S. 2014 – Present MIND MACHINE PRODUCT PLATFORM When we think about digital transformation we can recognize in many ways this has been going on for a long time. The question you want to ask is what’s new – and as suggested in the book “the Second Machine Age” have we reached a new inflection point in the impact of digital transformation. Many will argue the timing, but for today’s discussion we’ll suggest this next way of digital transformation really started to kick into high hear in 2014, and as part of that we are seeing transformation occurring in 3 core area: The balance between Mind (centralized decision making and individual involvement in all decisions) and Machines has seen as dramatic shift as machines are being used increasingly in business to connect desperate data sets, to make decisions faster and to remove individual bias (conscious or unconscious) from decision. We are seeing a shift from Product (the company in control and focused on what to make and what to sell) to Platforms. Great examples of platforms we are all familiar with are Uber, Lyft, Air B&B and Facebook. Organizations that don’t own the product, but create the platform to connect with customers in an efficient way And finally a shift from core audiences to crowd being a better descriptor of our audiences, and the impact these audiences have on our business. It’s more and more today about how you engage with the community, and how the community engages with you. CORE CROWD

Digital transformation is already universal Facebook has over 33,000 chatbots in production

Definitions Consumerism – the shift to purposefully adapt a business model to align more with the consumers needs and wants Digital technology - enables immense amounts of information to be compressed on small storage devices that can be easily preserved and transported (encyclopedia.com)

What does digital mean for insurance? More than an app Individually customized On-demand More than just improved efficiency

Technologies in use today Blockchain Data analytics Automation IoT Mobile / Platforms

What does “digital” mean for insurance? Prudential Q1 2019 Earnings Call:

What does “digital” mean for insurance? State Auto Financial Q1 2019 Earnings Call: State Auto Financial 2018 10K:

What does “digital” mean for insurance? MetLife – Chief Digital Officer Who else puts intentional focus on their consumer? Source: Accenture and Oxford Economics

System integration and IT collaboration are significant hurdles Source: Accenture and Oxford Economics

What does it all mean? Digital transformation is not only about doing things differently, but doing different things – from gathering and analyzing data for smarter decision-making to engaging clients, customers and suppliers in new ways

Why insurance organizations need to care about consumerism

New entrants Source: Knowledge@Wharton interview with RGAX’s CEO Dennis Barnes

Why is data evolving? Consumer Preferences Technology Data

What does digital transformation look like?

Brand Consumerism Importance of Brand

Insurtech investment Source: WillisTowersWatson

RSM’s connection to Insurtech

What can you do? Invest in digitally upskilling your talent around AI, analytics, RPA Define what “digital” means to your organization Start with small incremental steps to fund larger initiatives Focus on: leadership, ideas, velocity * “How Digital are You?”, A Report from the National Center for the Middle Market and Magento

What can you do? Develop tools to better understand your consumer segments Certain segments may react better than others to digital engagement Create partnerships with start-ups and other non-traditional companies Consider divestures of what you are not good at

Questions? Contact information: Richard.kes@rsmus.com Matt.wolf@rsmus.com