December 29, 2017 by Denis Dubois
Canada’s property and casualty insurance industry will continue to evolve rapidly in 2018 in response to accelerating technology, changing customer expectations and climate change.
Technology is a double-edged sword for insurers. Vehicles are safer than ever thanks to multiple sensors and cameras, but repair costs have skyrocketed because today’s cars are so complex.
This would not be a problem if accident rates were dropping. But frequency and severity are both rising due in part to sophisticated infotainment systems that distract drivers, along with the use of cell phones and other risky behaviours. Legalizing marijuana will only make the situation worse.
Fortunately, there is growing awareness of the problem and the need to educate drivers and to work with automakers and governments to reduce distractions.
On the positive side, technology is helping to meet the changing expectations of customers. With the digitalization of everything from marketing through to distribution, underwriting and claims, insurers can deliver faster and more convenient service while providing customers with more choice and flexibility.
Despite huge investments required, digital transformation is happening rapidly. Leading insurers are pushing the boundaries. They are using sensors and other technologies to evolve beyond their traditional role of providing help after a loss to helping customers to avoid or mitigate losses.
This proactive approach will become increasingly important as the consequences of climate change become more severe. Fortunately, Canada had relatively few weather-related catastrophes in 2017. But the hurricanes in the southern U.S., as well as the wildfires in California and British Columbia, serve as reminders that the future will undoubtedly bring us increasing water, wind, and wildfire losses.
The recent introduction of flood coverage in Canada was a positive step forward. The challenge now is to develop a better understanding of climate-related risks, effective ways to mitigate those risks and practical, affordable solutions that answer Canadians’ needs.