Transformation tips for P&C insurers: EY

Some offices are still using technology from the 1980s

Changing technologies, increased competition and higher customer expectations will be the main forces affecting Canada’s P&C industry this year, EY predicts.

“Taking measured steps to refine their current strategy isn’t sufficient,” says Janice Deganis, EY’s Canadian Insurance Leader.  ”As multiple factors are dramatically and quickly changing the industry, companies will need to focus on efficiency, investing in digital and improving the customer experience.”

Read: How analytics helps brokers

Also impactful, but to a lesser degree, are Canada’s slowing economy, changing regulations, cyber risks and catastrophes.

To deal with the changing landscape, EY suggests:

1. Transform operations to drive efficiency, reduce costs, accelerate growth and improve the customer experience

Some offices are still using technology from the 1980s, which doesn’t let those insurers respond to customer needs fast enough. EY suggests outsourcing some services to speed up transformation, but cautions companies to choose vendors and outsourced functions carefully.

2. Shift from a product to a customer experience orientation

Insurers should provide customers with risk advice as well as insurance products. “The rise of real-time risk data in both personal and commercial lines provides an opportunity for innovative insurers to address uncovered or mispriced risks.”

Read: The 2016 P&C preview

3. Position your organization for digital leadership

This is especially important for insurers looking to head off the challenges from FinTech companies. Don’t wait for full integration of new technology, EY says, but push forward with whatever is ready first.

4. Develop and attract the right talent to drive change

Tech-savvy new grads often “look at [insurance] as dry and boring and not as sexy as banking,” Chris Hirte, founder of the Young Insurance Professionals of Toronto group, told Top Broker in August.

“With finance, technology and consulting attracting most of the promising graduates… insurers must be proactive in recruiting and retaining next-generation innovators and leaders — while retooling existing teams with new skills.”

Insurance companies should reward innovation, make diverse hires, and create more risk advisory roles “as part of a value-added wealth management service.”

5. Prepare for the next wave of M&A activity

Leadership teams should clearly define what kind of acquisitions would best help them, EY says. Post-merger, make sure customer portals merge seamlessly, and fully understand any regulatory change. If an insurer decides to stay out of the M&A fray, they must develop strategies to remain independent. “Recruiting human capital will become paramount, as will accessing distribution that provides high-retention, profitable business.”

EY also suggests focusing on analytics, emphasizing innovation to compete with non-traditional competitors, and looking out for emerging risks.

“It’s a complex and volatile environment right now for P&C insurers, and they can’t afford to rest on their laurels,” Deganis says. “First and foremost, insurance companies need to rediscover who their customers are and what they’re looking for. That will inform much of the transformation needed to succeed in the next few years.”

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