Tessie Sanci, Associate Editor
Openness to tech innovation is key in 2017: EY | Canadian Insurance

Openness to tech innovation is key in 2017: EY

New report finds that investing in technology will contribute to insurers’ bottom line

Property and Casualty insurers should concentrate on embracing technological innovation that will appeal to clients looking for convenience in their services, drive down costs and attract new types of talent this year, according to a new report by Ernst & Young (EY).

A focus on customer centricity, especially as it applies to the growing millennial population, is key in 2017, states the report, entitled 2017 Canadian Property and Casualty Insurance Outlook, released on Tuesday.

Insurers’ strategy should highlight constant digital access, personalization, self-directed functionality and a seamless customer experience for this generation, whose wealth is growing faster than any other age group.

“Large commercial carriers targeting [millennial entrepreneurs] should continue to provide risk engineering, loss control and expert risk advice as a strategic additional value to their large commercial clientele,” the study states.

Tech can also be used to improve P&C insurers’ financial performance, especially in an environment of shrinking returns due to low investment yields, soft pricing and increasing claims costs, according to the report. The application of robotic process automation to insurers’ business processes and back-office operations can help by reducing costs, decreasing error rates and increasing customer satisfaction.

Beating the ‘talent crunch’

The P&C industry must also expand its ideas on the type of talent it needs to attract. Professionals with digital expertise in areas such as artificial intelligence, social media, blockchain and digital marketing can benefit the industry, the report states.

Insurers should prioritize hiring risk experts, especially in the area of cybersecurity, because that knowledge will be needed for internal operations and providing advice to commercial clients.

Harnessing cyber opportunities

Cybersecurity should also be a key topic of discussion in 2017. Defending against cyber risk is important to protecting insurers’ own businesses but is also an opportunity for P&C firms whose clients are looking specifically for policies to protect them in the case of cyber breaches.

“As these policies become the norm for large companies and more popular among smaller businesses, insurers will need to develop products, services and pricing methods to meet escalating market demand,” the report states.

Prioritize natural catastrophies

One key area of strategic focus for insurers that is not directly related to the escalation of technology use is natural catastrophes. CATs must be high on the corporate agenda, as these events have become the “new normal,” according to the report. Insurers should expect that their exposure to and resilience in the face of CATs will be at the forefront of the regulatory agenda.

Read EY’s full report can here.