Canadian insurers face challenging year ahead: Ernst & Young

Volatile capital markets and expanding regulations will challenge Canadian property and casualty insurers in 2012, but there are opportunities for success if insurers make the right moves, Ernst & Young says.
“To reposition strategically for growth and remain high performers, insurers have to focus on innovation, taking data analysis to new levels and using social networks to better understand the customer,” said Doug McPhie, Ernst & Young’s Canadian insurance industry leader. “Streamlining cost structures and using a variety of stress testing scenarios to get a better grasp on cash flow could also generate competitive advantages in this environment.”
To remain competitive in 2012, Ernst & Young suggests Canadian property and casualty insurers focus on the following five steps to remain competitive in 2012:
•Manage low interest rates and asset liability matching. Set appropriate risk tolerances by identifying relevant stress tests and measuring exposure to risks.
•Make better use of technology to increase business intelligence and improve efficiencies. Improve cash flow across the business and tighten operational efficiencies through advanced analytics, cloud computing and social networks.
•Transform core insurance systems. Transform billing systems to improve customer experiences and cash flows.
•Strengthen risk management infrastructure to respond to regulatory challenges. Move towards internal capital models for internal risk management, capital management, regulatory reporting requirements and rating agency assessments to improve risk management standards.
•Adapt to the changing face and voice of the customer. Develop marketing plans composed of multi-channel strategies including online and offline channels to suit demographically diverse customer expectations.