Utter the word “disruption” in a crowd of insurance professionals, and you might get some mixed responses. In KPMG’s sixth annual Canadian insurance industry opportunities and risks report, 68% of insurers surveyed said they expected significant technological disruption in the sector in the next three years, and agreed that it would weaken, or potentially eliminate, some of the traditional insurance companies. Yet, the same report also found that 63% of Canadian insurers see technological disruption as more of an opportunity than a threat.
Between the two groups, Darryl Levy (pictured), president and chief executive officer at Wynward Insurance Group, definitely falls into the latter.
“Disruption is great for business. It means that you’re continually innovating as a business and, at Wynward, we look at the disruption that’s in the market today, but also the potential of disruption, as a good thing because it means that we’ve got to disrupt ourselves as an insurer before someone else does,” he told Insurance Business.
The implementation of technology at insurance companies is one of the key ways of bringing disruption inside a company’s walls. Wynward is always looking at how to best serve its customers and brokers with the use of technology, and specifically data and analytics, while developing products and services that meet the customer’s needs at the point of sale, whether it’s online or at a bricks-and-mortar location.
After all, keeping disruption top-of-mind is no longer an option – it’s a necessity if insurance companies in Canada want to thrive in a competitive marketplace.
“Our industry is now in a critical moment where it’s innovating more than probably ever in its history because of the use of technology and what technology can do for us, [and] for our broker partners and for our customers collectively,” said Levy. “We’re able to leverage some very interesting toolsets that hadn’t been available before to serve our customers better and that’s what it’s all about, as well as leveraging technology to differentiate ourselves.”
As a pure play commercial insurer, and with the aid of technology, Wynward has the ability to understand customers and their requirements, its brokers and their needs, as well as where its claims are coming from and, importantly, how to build loss prevention into the customer equation.
“We get ahead and assist them with loss prevention [and] risk mitigation in their businesses as part of the insurance policy, which can add value to their business, so all of these things present us a great opportunity to take what’s been known as a product that has been sold versus bought and make it interesting for the customer,” said Levy, adding, “This inflection point we’re at today, because of technology and because of the disruption in our business is actually a good thing for incumbent legacy insurers in Canada.”
Not only is the insurance business being disrupted by technological advances, but the physical environment in which we live is also facing upheaval, namely because of the effects of global warming, which in Canada is occurring at about double the magnitude of warming worldwide, according to a recent report from Natural Resources Canada. In this case, too, the insurance industry needs to stay on top of these critical developments.
“How does our industry get ahead of that, and it’s a lot of partnering with government. A lot of the great work that IBAC and IBC is doing – and they’re partners of ours – is working with government to ensure that government is focused on critical infrastructure investments across Canada that proactively mitigate against future losses from catastrophes caused by climate change,” explained Levy. “I think the message is resonating, and I certainly meet with all levels of government on a regular basis and we talk about the strategic infrastructure investments that are required.
“These are not inexpensive undertakings, to make these investments, but they’re critical because our cities are threatened. If you look at the 49th parallel and the cities across the country, many of our major cities are built around bodies of water, and that’s concerning.”
The leader points to the devastation caused by the Calgary floods in 2013 as one example of the impacts of natural catastrophes. In response, the government, in concert with the insurance industry, needs to batten down the hatches and make investment decisions to help mitigate against future losses “because they're not going away,” added Levy.
Read more: The new generation of floods explained
Adding to the wave of change sweeping through the insurance industry, the make-up of the insurance workforce is likewise becoming a challenge for insurers.
“We’re a service-intensive business in insurance, and service-intensive businesses are all about people. Our most valuable asset walks out the door every night, so if we don’t take care of them, someone else will,” said Levy. “Our customers can’t open their doors unless they have our product. It’s a condition of any debt covenants they have with their financial institutions [and] it’s just good business to have our product, so we’re a key part of our economy. Attracting employees that recognize that, and want to be part of that change and a dynamic industry is very, very important, and the demographic is changing. The insurance industry has an aging workforce in Canada and many of us who are running insurance companies are trying to get ahead of that by continually recruiting people into our industry that are from outside the industry.”
The coming years are sure to bring further innovation and disruption into the insurance marketplace. To ensure continued growth, Wynward is focused on the risk classes it serves across the country, as well as its geographic markets in all provinces and territories. Unsurprisingly, technology also factors into the insurer’s plans for the coming years.
“The new risk classes – cyber, cannabis, technology – those are growth areas for us that we’re deeply invested in. From our own technology standpoint, we’re going through a revitalization of a new back office system as we speak that we’ll be working on through 2019 and part of 2020 that will provide us an even greater platform to serve our customers and our brokers better, and, at the same time, allow our employees to leverage data and analytics even more in pricing and determining the risk that we take every day,” said Levy. “That’s very exciting for our teams and for our brokers, to communicate differently and more effectively.”