Canadian Underwriter

Leading the Pack

March 1, 2017   by Janice Deganis, National Insurance Leader; and Steve Yendall, Insurance Advisory Leader, EY Canada

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As 2017 takes hold, Canada’s property and casualty insurance sector finds itself grappling with converging forces that will continue to test organizational mettle and reshape the industry as a whole. Technology is changing at a rapid pace, customer demands are evolving constantly and pressure is mounting to find talent with the right digital skills to keep up with future business needs.

Beyond that, an uncertain economic/political climate and higher catastrophe risks are creating the perfect storm for considerable disruption in the p&c industry. The impact on Canadian insurers will be mounting pressure from growth, profitability and risk management perspectives.

Janice Deganis, National Insurance Leader, EY Canada

But the future is not all bleak. Those companies willing to dig deep into a thoughtful reassessment of their core business and business models are going to be able to weather the storm. By recognizing some of the key external forces affecting the industry this year and developing a strategic roadmap to navigate these shifts, p&c insurers can be better-prepared to thrive in the face of fast-evolving disruption.


As detailed in EY’s 2017 P&C Insurance Outlook, technology, customer expectations, talent and economic/political uncertainty will have a big impact on the industry this year. But cyber risks and catastrophes (both natural and human-made) are also worth putting on the radar as growing threats that will test insurers. Take a closer look at just four of the external factors shaking up the insurance sector.


Advances in technology continue to add both pressure and opportunity to the p&c industry, and the impact is both broad and complex.

Firstly, these advances are driving customer expectations for innovative insurance offerings. Insurers will need to be more adept at deploying digital technology to reach new clients, upsell services and products, and manage competitive threats. Meanwhile, it is anticipated InsurTech will lead to further disruption in 2017, as innovative start-ups will move quickly to fill gaps in current insurance offerings.

Steve Yendall, Insurance Advisory Leader, EY Canada

Secondly, amidst depressed investment yields and income, technology has become a critical tool in unlocking operational efficiencies, yet many insurers remain saddled with outdated technology that hampers their ability to reduce costs and meet their customers’ evolving needs. New developments in data analytics, robotics and process automation can drive better performance, but they require a whole new set of capabilities and investments in infrastructure.

With technology comes cyber risk. With digital attacks on the rise, cyber risk insurance will see significant growth as a commercial line of business in 2017. At the same time, insurers themselves will be under pressure to create robust cyber security systems in their own organizations.

And thirdly, technology advances such as smart homes, a growing sharing economy, self-driving cars, drones and more represent new risks that demand new solutions and even challenge conventional business models.

Customer expectations

Within an increasingly self-service, on-demand economy, insurers are compelled to take a critical look at the changing demands of their customers. As demographics, technology and even regulatory parameters shift, customers’ expectations for a more digital, personalized and seamless experience will only continue to grow. Those insurers that adopt a more holistic approach to delivering simpler, faster processes – and that deploy data analytics to anticipate customer demands – may be better-positioned to fully meet the expectations of their clientele.


Amidst an accelerated wave of retirements by insurance professionals, companies stand to lose not only a considerable number of specialists, but also a significant store of key underwriting and adjusting skills. Insurers will need to attract Millennials to fill the gap.

Forecasts suggest that by 2020, Millennials will make up 46% of the workforce, yet most of them perceive the industry as not being innovative enough. As well, the changing nature of the sector is driving demands for new types of skills, such as cyber risk management, digital marketing and customer-centricity expertise, which have not traditionally been skill sets sought by p&c employers.

Economic and political uncertainty

Low insurance rates, continued volatility in the energy industry and Canada’s stagnating growth will continue to put pressure on insurers. In the broader economy, there is still much uncertainty around the economic policies of the new administration in the United States and how they will impact future investments.

To add to this backdrop, p&c insurers are dealing with low investment yields,

soft pricing and rising claims costs, including catastrophic loss claims stemming from increased natural disasters. This is straining returns and necessitating fundamental structural change to the enterprise cost base, while driving the need for insurers to focus on profitable growth by doing more with less.


In the face of all this stormy current and looming disruption, p&c insurers can stay afloat – and even prosper – by putting key strategies on their radar for the rest of 2017. Developing a strategic roadmap will help insurers seize the opportunities of this changing market and be better-positioned to succeed in the years ahead. Five themes emerge as priority areas for action.

  1. Put customer centricity at the top – Keep a laser focus on customers and be ready to adapt go-to-market strategies to meet their ever-changing needs. This year, in particular, insurers will want to develop a strategy that highlights 24/7 digital access, personalization, self-directed functionality and a seamless customer experience. And develop customer-centric strategies that recognize and accommodate the many points of connection, from digital interactions to broker channels and direct writers.
  2. Embrace customer-driven innovation – Put the emphasis on customer-driven innovation and accelerate the development of new products and business models that will unlock market potential. Those insurers that are most nimble in defining new customer demands and getting these products to market will thrive. Connecting and partnering with InsurTech start-ups and external innovation incubators and think-tanks can be powerful ways to transfer new ideas.
  3. Invest in enabling technology – Insurers are going to need to assess and adopt technology to improve performance at every mark. This can entail everything from embracing the robotics that can automate insurance processes to deploying advanced analytics to unlock new efficiencies and solutions. As upgrading foundational policy, claims and billing systems is increasingly the single greatest element in enabling the integrated digital agenda, carriers will need to zero in on smart investments to replace outdated infrastructure and explore cost-effective alternative solutions to keep pace.
  4. Elevate Cat and cyber risks – Put the perils of catastrophes and cyber risks high on the corporate agenda. Natural Cat exposure continues to drive regulatory solvency and risk concentration concerns. Everyone witnessed the impact of 2016’s Fort McMurray wildfires as Canada’s costliest event to date, and events of this nature could have perilous consequences for regional insurers. Similarly, insurers need to focus on strategies to address cyber risks. Hiring cyber security experts, providing cyber risk training to staff and having the chief risk officer work closely with IT teams are critical for an active defence system against attacks.
  5. Talent is the key – Rethink strategies to attract, develop and retain talent who have the skills to fuel growth in a fast-evolving environment. It is not just about replacing retiring expertise; it is also about equipping one’s organization with the next-generation skills and knowledge that the industry needs. Identify the digital expertise that will be essential, from artificial intelligence, social media and blockchain specialists to digital marketing and customer care executives. And in building talent strategies, it is imperative to understand the Millennial mindset to be able to attract the best and brightest of that genera-tion. Building a collaborative culture that encourages a free transfer of knowledge between incoming talent and seasoned professionals will be critical to success.

This kind of strategic roadmap, calibrated to the unique challenges that 2017 brings, can help insurers navigate the shifting forces that are reshaping Canada’s p&c sector. Though these challenges are among the most complex the industry has faced, they also represent tremendous opportunity to build business, drive growth and change the future of the entire sector for the better.

Those insurers that develop the necessary organizational muscle will be strong enough to unlock the competitive advantages of digital and product innovation, harness the talent that will drive performance and deliver on ever-changing customer expectations.

Janice Deganis, National Insurance Leader; and Steve Yendall, Insurance Advisory Leader, EY Canada

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