With a weak loonie, low interest rates and increasing competition, this has already been a challenging year for many of Canada’s property and casualty insurers: but according to EY's 2016 P&C Insurance Outlook
those wishing to thrive will have to successfully contend with 7 forces impacting the insurance industry, and by far the most important of these is technology.
“Digital technologies, such as social media, telematics and analytics
, are redefining the insurance market,” says the report, noting that the impact will be felt across many business areas, including marketing, distribution, and customer service.
Technology rates the highest possible score of 10 in the report, indicating a very high impact.
"One of the ways P&C insurance companies can stay competitive is by focusing on becoming a digital leader internally as well as externally,” says EY's Canadian Insurance Leader Janice Deganis. “Attracting the right talent to help undertake the transformation required to achieve growth in such unpredictable times is also critical."
Coming in second with a rating of nine is the topic term ‘competitive landscape’, with the report noting that “Competition will heat up as established insurers act fast to capitalize on game-changing market shifts. Challenges will also come from non-traditional sources, such as FinTechs
, offering innovative digital solutions.”
At number three, with a rating of eight is the topic of customer expectations. “Services in other digitally enabled industries are causing consumers to demand more personalized experiences from insurers,” reads the report. “With the greater opportunity for comparison shopping on the web, the impact will likely be significant.”
The remaining topics include the uncertain financial and economic conditions that are expected to continue for the rest of the year, including slow economic growth, a soft oil and gas industry and a sinking loony; regulation; cyber risks; and catastrophes.
"P&C insurers have a lot on their plate this year," says Deganis. "Taking measured steps to refine their current strategy isn't sufficient. As multiple factors are dramatically and quickly changing the industry, companies will need to focus on efficiency, investing in digital and improving the customer experience."