EY: Canadian insurers should rethink current business models

A new report from EY suggests that Canadian insurance providers should reinvent their business models if they hope to face the challenges brought by up-and-coming insurance technologies, as well as growing competition.

“Canadian insurance providers are vulnerable to shifting trends within their own industry,” said EY Canada insurance technology leader Neil Pengelly.

Pengelly noted that declining consumer trust levels, legacy technology systems, and an increasingly large skills gap are creating more urgency for change in the insurance industry.

“Those with a clear vision of the future and the courage to invest in thoughtful, customer-focused business models will emerge as leaders in the new economy,” the expert remarked.

The report, titled “NextWave Insurance: personal and small commercial 2020,” recommends that insurers be more focused on customers’ needs, which could involve redesigning their business models to better serve clients.

EY has outlined several considerations for insurers to make:

• Create seamless digital experiences – The most effective insurers are those that can anticipate consumer needs, target and cross-sell more effectively, build self-serve capabilities, and focus on data-driven customer relationships.
• Utilize relationships to improve business processes and customer experiences – Insurance providers can expand the value of their offerings and quickly move to cloud-based platforms by partnering with “ecosystem relationships” (i.e. sharing platforms, social media, insurtechs and data providers) to provide specialized, but complementary services.
• Take a proactive approach to personal and commercial cyber risk protection – Insurers can build trust and confidence with customers by being pre-emptive in addressing cyber threats. This will include things like offering proactive monitoring and incident response services.

But even with these goals to aim for, insurers still need to be pragmatic about how they should shake up their business models, Pengelly said.

“While tomorrow’s leading insurance businesses will be purpose-led in their strategies — including more agile with their resources and dramatically more customer-centric — the most important capability will be their ability to drive organizational change,” commented Pengelly, who added that insurers also need to “get better at execution.”