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

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 As Anthony mentioned, I am the founder of Strategy Meets Action. I’d be remiss if I did not just take a minute to explain who we are… We are a refreshing new choice in the insurance analyst space… For insurers - - who have services and research around peer analysis, What is very different about us - - is the triangle… We always start with strategy - - - define capabilities and then talk about investment s- -you will see in this presentation – this linkage in our presentation. 2

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

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.

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.

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.

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 INNOVATE for ADVANTAGE Commit to Dynamic DISTRIBUTION Capabilities Optimize CLAIMS beyond the Transaction Take UNDERWRITING Differentiation to the Next Level Claims Analysis Extend ANALYTICS across the Enterprise Profitability Analysis Leverage Next-Gen Technologies Source: Strategy Meets Action 2013

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

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

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

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

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

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

The Future of Claims Prevention Mitigation Restoration Instrumentation/GPS Safety Engineering Enhanced Risk Selection Location based data External risk data Analytics Risk Mgmt. & Loss Control across lines Social media 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

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

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

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

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

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

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

Proactive and Reactive Mobile Interactions

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

Telematics Tipping Point

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

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

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

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

Innovation in Action Travel Industry

Innovation in Action Travel Industry

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

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

Claims CAT Capabilities COMPETITIVE POSITIONING SMA Business Value Maturity Matrix Claims Moving Beyond the Transaction Competitive Advantage OPERATIONAL Excellence Innovate 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

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