Insurtech investment reached an all-time high in 2019, reported Willis Towers Watson in its Quarterly InsurTech Briefing. Overall global funding commitments in the insurtech sector totalled US$6.37 billion in 2019, which is a third of the historic total funding for the sector – but how does the Canadian insurance marketplace stack up when it comes to insurtech developments and adoption?
According to one expert, it’s holding its own.
“Insurtech in Canada is very exciting,” said Steve Whitelaw (pictured), Applied Systems’ vice president of industry and partner relations for Canada. “Ryerson has their garage, so there’s lots of engagement there. Waterloo is a big hub and some of our insurer partners that we are partnering with are using those garages in various locations as input into their broker labs, and we’re working with insurers and insurtechs to say, is there something here or not, and what’s the effort to integrate it, so it’s a healthy scene in Canada.”
What’s unique about the environment in Canada is that it can act as a greenfield for tech solutions. Outside of personal auto, there isn’t as much regulation in the country compared to the US, explains Whitelaw. Applied can use the Canadian marketplace to try out some of its technology partnerships and, if they work, the team has not only the opportunity to spread a particular solution through Canada, but also potentially the US or worldwide.
“That excites me about being out in the forefront and further enabling our brokers to digitize and use all that’s out there to serve their customers,” he said. “There’s so much opportunity for insurtech that we could complement and even if one day we may not have it, it’s on our roadmap. We partner with someone early and then when we build it out, it allows us to get capabilities to brokers sooner.”
And despite some perceptions around technology disassociating the relationship between a broker and their customer, the Applied expert actually thinks that the digitization of brokers brings the customer and insurance professional closer together, with the help of texting, chatbots, or whatever technology that’s used to establish that relationship.
“You can interface with a consumer more often than not,” said Whitelaw. “And I fundamentally believe that technology is here to help that [relationship].”
In fact, his hypothesis for why there’s been a shift in market share between direct writers and the broker channel on the personal lines side is that direct writers could react more quickly to customer demands, whereas the broker channel was slower on that front because of the number of parties involved – from the diversity in broker management systems to carriers. However, technology can help brokers catch right back up.
“The broker channel is going to grow because the technology will allow us to meet customer expectations and engage with the customers,” predicted Whitelaw, adding that the types of insurance products coming to the market will help underscore brokers’ value. “The product itself will, depending on how its structured, become more complex with more decision points for consumers to make when they’re choosing what level of coverage is adequate for their circumstances, be it if they’re single, or with a family, or young, or retired. The more complex the product is, that lends itself to the value of the broker and all those value points will help build up any reputational issue there is between the consumer and the insurance industry.”
With consumers unhappy about the price of some insurance products, such as auto insurance, improved technology solutions will also drive down the cost of distribution in the supply chain, reaping rewards for the end client.
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“There is an expense inside the equation that’s causing premiums to go up and that line item is that distribution expense line item,” said Whitelaw. “Using technology to enable the brokers to provide the advocacy, the advice, and help with the claim – those are the kinds of things that the consumer will see and that’ll build up that trust.”