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quarterly-insurtech-briefing-q4-2017

Incumbent InsurTech

Incumbent InsurTech Strategy (Re)insurance Innovation Survey (Re)insurance Innovation Benchmarking To better understand the state of innovation in the (re)insurance market heading into 2018, we partnered with CB Insights to develop a (re)insurance innovation benchmark survey, which was distributed to subscribers of CB Insights’ weekly insurance technology newsletter beginning in December 2017. The survey received responses from nearly 600 (re)insurance and investment professionals, the majority of which described themselves as senior level executives with intimate knowledge of their company’s innovation strategy. Key findings from the survey are summarized on the right side of the page. Participant demographics are outlined below and charts depicting the complete survey results are provided on the following pages. Summary of Survey Findings • 58% rate their company’s financial performance as “high” or “very high” vs. competitors, but 55% rate their company’s innovation as average or worse and 59% do not think their companies are risk-seeking when it comes to innovation • 76% believe their company is “moderately” to “extremely” at-risk of disruption, even as 72% of company resources are devoted to incremental innovation and 46% describe their company’s innovation philosophy as “ad-hoc” • Munich Re, Lemonade, AXA and Swiss Re are viewed as most innovative by peers • Innovation reports to the C-level at more than half of participants’ companies • Only 12% of participants believe acquisitions are their organization’s primary orientation toward innovation, with 88% more inclined to develop internally or partner • Accelerators/incubators are viewed as the most valuable external innovation partners; customers and employees are viewed as the most valuable internal sources of innovation • More than 55% of participants believe each of the value chain functions of marketing & distribution, underwriting, customer service, claims and customer retention are “extremely” or “very” in need of innovation at their company Survey Participant Demographics Headquarters Product Focus Premium Volume 79% work for a North American or European (re)insurance company 53% work for a P&C focused (re)insurance company 60% work for a company with >$1 billion of premium N. America Europe Asia Aus./NZ S. America Africa Middle East 9% 5% 3% 2% 1% 43% 36% P&C Life Health Multiline Reinsurance ILS Other 11% 3% 2% $10B $1-10B $250M-1B $100-250M

Incumbent InsurTech Strategy (Re)insurance Innovation Survey Financial Performance vs. Competitors – LTM 58% rate their company’s financial performance as “high” or “very high” vs. primary competitors… Level of Innovation vs. Competitors – LTM …But 55% rate their company’s innovation as average or worse Appetite for Risk Associated with Innovation …And 59% do not think their companies are risk-seeking when it comes to innovation Very High 16% Very High 14% Very Risk-Seeking 6% High 42% High 32% Risk-Seeking 35% Average 33% Average 37% Neither Risk-Seeking Nor Risk-Averse 33% Low 6% Low 15% Risk-Averse 23% Very Low 3% Very Low 2% Very Risk-Averse 3% Risk of Disruption from Emerging Technologies 3 out of every 4 respondents believe their company is moderately to extremely at-risk of disruption… Innovation Resource Allocation …But 72% of company resources are devoted to incremental innovation (vs. disruptive/radical) Innovation Philosophy …And 46% describe their company’s innovation philosophy as “ad-hoc” Not At All Slightly 6% 18% Incremental/ Continuous 72% First Mover 27% Moderately 48% Fast Follower 27% Very Extremely 4% 25% Disruptive/ Radical 28% Ad-hoc, neither first mover or fast follower 46% Most Innovative (Re)insurance Company Munich Re, Lemonade, AXA and Swiss Re viewed as most innovative Level at Which Innovation Function Reports Innovation reports to the C-level at more than half of companies Primary Orientation Toward Innovation Only 12% believe acquisitions are their organization’s primary orientation toward innovation >10% of Responses Board of Directors 14% Buy 12% >5% of Responses CEO CxO 20% 35% Build 48% >2% of Responses EVPs/SVPs None/ Decentralized 10% 18% Partner 40% Other 4% Quarterly InsurTech Briefing Q4 2017 40

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