Disruptors “seeking expertise” offer biggest opportunity for brokers in 2017: Cook

Brokers to harness 'consulting' opportunities with disruptors

Of all the trends to watch this year, disruptors that will find their way into the P&C insurance landscape offer the biggest opportunity for brokers in both the commercial and personal lines, according to Philip Cook, CEO of Omega Insurance Holdings.

Cook told Canadian Insurance Top Broker that brokers can play a big role in consulting and engaging with disruptors, in that “at some point, disruptors will realize they need to add insurance expertise [in their ventures]”.

“Most disruptors are consumer and technology driven, and they haven’t yet considered that extra dimension (insurance expertise),” Cook said. “Therein lies the opportunity for brokers to deal directly with disruptors, not necessarily to become brokers for disruptors, but to become consultants.”

Cook believes brokers have the opportunity to be a part of the re-engineering of their insurer partners, with the ability to bring a “huge amount of consumer insight to the insurer”.

Speaking at the Insurance Institute’s 2017 Trends and Predictions breakfast, held in downtown Toronto on Wednesday, Cook said that the insurance industry was “ripe for disruptors to come in and change the way we do things”, warning insurers to start planning five to 10 years in advance, in order to keep up.

“I think our industry has been boxed in for a while. It’s starting to change, as you see some companies bringing in people from outside the insurance industry… But we are all going to have to be a disruptor or face being disrupted.”

He challenged the industry to “think out of the box, re-imagine or reconstruct the box, but not to stay in the box”.

Losing out on investors

Cook said that the Canadian P&C industry is likely to continue to lose out on capital investments due to its poor performance over the past year.

Cook said that 2016 “has not been a spectacular year for the P&C industry in Canada”, with domestic companies becoming unprofitable as of the third quarter (after three years of profitability), reporting a combined ratio of just over 100% at the end of Q3, while branches of foreign companies were “somewhat a disaster” with a combined ratio of 124.5%. On a combined basis of both domestic and foreign branches the ratio was 104%. “There’s not much chance that will go down in Q4.”

“We’re probably facing the prospects of an unprofitable year, and it’s not a good thing, particularly given the amount of capital out there looking for a home. It’s ironic that there’s so much new capital coming into the P&C industry globally, but very little is actually ending up at a primary company level. It’s going into new vehicles, specialty vehicles offshore, cat exposure… that’s not to the benefit or is even detrimental to the insurance industry.”

Trends become reality

Cook said that issues including climate change, economic uncertainty, cyber risk, consolidation, social media, ageing population, telematics, predictive modelling and increased regulation can “no longer be seen as trends, since they are now realities”.

Rather, the industry should be watching out for: disruptors (threats and opportunities), peer to peer alternatives, relevancy (insurers and governments), harnessing social media, new products and new delivery systems, competing for customers, client ‘needs, wants and expectations’, and new non-insurance players in the industry.

Cook’s 10 predictions for 2017 and beyond include:

  • Continued globalization (insurers, intermediaries and clients)
  • Continued growth in alternative risk transfer facilities
  • Re-classification of catastrophic loss
  • More “disruptors”
  • Capital shifting (following the opportunities)
  • Stabilization of regulatory requirements
  • New forms of consolidation (pressure on middle market players)
  • Growth in specialty/customized products
  • Expansion of “affinity group” sales
  • Continued need for talent



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