Canadian insurers are leveraging data and new technology to become more customer-friendly as brokers face new pressures, an industry survey from KPMG finds.
“With insurers exploring direct-to-consumer services, the fate of the broker is in question,” KPMG’s sixth annual survey of more than 40 Canadian insurers says. The report outlines the industry’s top opportunities and risks for the coming year.
Legacy and past success is preventing many insurers from responding and creating new channels, said Chris Cornell, partner and national sector leader for insurance at KPMG Canada, in the report.
“A lot of insurers have roots in broker-based models, and they can’t simply be tossed out because the industry is in transition,” he said.
To adapt, insurers need to manage their existing business model while building out a direct-to-consumer channel, he said.
Although Canadians’ historical dependence on brokers means they won’t disappear overnight, the report says, they’re being forced to adopt products less susceptible to digital disruption.
The challenge is for an industry unaccustomed to consumer interactions beyond on-boarding and claims to shift priorities. This means developing a service offering that does away with excessive paperwork, process and complexity.
“When you’re talking about making insurance simple, one of the best plays is to leverage design, digital, and technology to cut through the paperwork, the claims processes, and compliance exercises so that it doesn’t create an onerous experience,” said Peter Hughes, KPMG Canada’s digital services leader, in the report.
Although the top risk for organizations was the failure to adapt to customer needs, for the industry, as a whole, it was the regulatory and compliance burden.
The survey said the industry is viewing new accounting requirements under IFRS 17 as a major challenge. Part of the concern is a “chicken-and-egg scenario,” KPMG’s Dana Chaput said in the report, in which insurers are implementing the International Financial Reporting Standards changes without understanding all the capital and tax implications.
Read the full report here.
Top risks
For organizations
- Failure to adapt to changing customer preferences and insurance needs.
- Regulatory and compliance burden.
- Failure to adopt new technologies successfully.
For the industry
- Regulatory and compliance burden.
- Natural catastrophes.
- Low interest rates and equity market.
Top opportunities
For organizations
- Enhanced operations processes and
use of technology. - Data analytics to enhance product design,
marketing, and pricing. - Offering better customer experience.
For the industry
- Data analytics to enhance product
design, marketing and pricing. - Changing customer needs and
expectations. - Enhanced operational processes and
use of technology.