One of the biggest challenges in the insurance industry today is the pace of change. It’s no secret that the insurance industry has been slightly complacent when it comes to digital innovation. Compared to other sectors in the wider financial services industry, insurers are somewhat weighed down by archaic processes, legacy systems, and, to some extent, traditional thinking.
According to Liberty Mutual Canada CEO, Garth Pepper, the successful insurance companies moving forward will be the ones that successfully anticipate the speed of change and adapt their business strategies accordingly.
“The underlying basis of how the insurance business works hasn’t, in my mind, changed in decades – if not longer,” he told Insurance Business. “It’s gotten faster with technology, there are better tools and things like that, but the underlying fundamentals haven’t changed much. However, I think everything will change dramatically in the next five, certainly in the next 10 years.
“I believe the industry is going to change dramatically. We’re already seeing it in personal lines more obviously than commercial, but it’s going to follow in short order in commercial. So, our focus remains on how we anticipate the underlying dynamics that are going to change so that we can make sure we’re at the forefront of that.”
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In preparation for industry-wide changes in commercial insurance lines, Liberty Mutual Canada is focused on developing ease of doing business, Pepper explained. He added that not only will best-in-class insurers have to provide the best products and the best services, but they have to be easy to deal with.
“It’s also about processing business in a more efficient manner,” Pepper added. “We can’t spend the same amount of time on a small or mid-market run-of-the-mill risk versus a highly complex energy-related account, or something like that. So, we’re focused on streamlining processes for vanilla risk business, looking at whether we can build them into programs or offer multi-year policies so they don’t need to be touched so often.”
As well as finding new operational efficiencies, successful insurance firms of the future are going to have to find answers to a number of age-old challenges.
“A big one, of course, is attracting top talent in a competitive environment, and then retaining and developing that top talent,” said Pepper. “Environmental is another challenge on everyone’s radar. And then the regulatory challenges always exist – finding the balance between the regulator’s desire to have a very secure and well-capitalized industry, while also enabling innovation so that we can continue to have a competitive insurance industry. These are all ongoing challenges.”
