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P&C industry must simplify product design and distribution: Swiss Re | Canadian Insurance
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P&C industry must simplify product design and distribution: Swiss Re

Increased customization and affordability of products are critical

Customized products that are developed and distributed through more streamlined methods could make those products more affordable and appealing to a greater number of consumers, thereby reducing the “protection gap,” according to executives of Swiss Re Reinsurance who spoke at the company’s 32nd annual Canadian insurance outlook breakfast in Toronto on Tuesday.

“The number of people who are uninsured, based on the statistics we have today, is more than people that are insured on a global scale,” said Moses Ojeisekhoba, CEO of Swiss Re Reinsurance.

Overcoming this protection gap must include developing products that are more affordable, easier to access and easier to understand for customers, he added.

The ability to break down products into smaller units through microinsurance in order to fulfill very specific needs can help in cutting down on costs and is being explored by some companies, according to Ojeisekhoba.

For instance, a consumer can purchase a product for the exact length of time it is needed instead of the typical process of purchasing coverage for a full year, said Ojeisekhoba.

Microinsurance is not a popular concept in Canada but it would be a “worthy experiment,” added Veronica Scotti, president and CEO of Swiss Re Canada.

Embedding the cost of insurance into products that consumers are already using could also help to increase the number of people who have coverage, according to Ojeisekhoba.

“So, if you’re a farmer in Zimbabwe…the seed plants that you’re now buying also allows you to have insurance coverage at the same time” as opposed to that farmer having to buy a separate policy, said Ojeisekhoba.

Technology and more compact processes in production and distribution will give insurers the ability to develop products that can be more customized to the consumer and distributed sooner, according to Scotti.

“You plan your product one year to two years in advance before it hits the market and then you cross your fingers that someone is going to buy it. It’s all bundled together because by the time it goes through the [corporate] machine, a lot of costs have been added up,” she explained.

“If you could just be done with all of that and just took the product directly to the [consumer] – and Sonnet Insurance is one example in Canada where they’re trying to do that – I think it’s a worthy experiment. I think the costs go down and, most importantly, the flexibility is enhanced,” she added.