Canadian insurers need to rethink existing business models to overcome challenges brought on by new emerging technologies and intensifying competition, says Ernst & Young in a report released Feb. 26.
"Canadian insurance providers are vulnerable to shifting trends within their own industry," says Neil Pengelly, EY Canada Insurance Technology leader. "Declining levels of consumer trust, along with legacy technology systems and a growing skills gap are creating more urgency for change. 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."
Data-driven customer relationships
EY explains what to prioritize when redesigning business models in its NextWave Insurance: personal and small commercial 2020 report. It recommends that insurers develop “seamless digital experiences”. The insurers that will increase market share will anticipate consumer needs, target and cross-sell more effectively, build out robust self-service capabilities and focus on data-driven customer relationships.
Cloud-based platforms
In addition, EY says insurers will benefit by moving to cloud-based platforms by partnering with ecosystem relationships (e.g. sharing platforms, social media, InsurTechs and data providers) to offer specialized, but complementary services in mutually beneficial ways.
Finally, the report says insurance companies can increase customer trust by developing effective techniques with respect to cyber risk protection, including proactive monitoring to incident response and adopting possible defenses to protect their customers from identity theft and data breaches.
"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," says Pengelly. "Creating an aspirational purpose, new offerings or traditional business models isn't enough. Insurers must also get better at execution."
To learn more, consult the full EY NextWave Insurance: personal and small commercial 2020 report.
