Canadian P&C industry must invest in technology, new talent to stay competitive

Canadian property and casualty insurers should be making investments in both their technology capabilities and their leadership to best leverage increasing amounts and kinds of data, according to a new outlook report from Ernst & Young.

 Insurers need to have ways to analyze information to best meet customers’ expectations, notes the company’s outlook report for 2013.

“Integrating and leveraging data throughout the insurance sales cycle can improve underwriting, customer service and claims experience,” Doug McPhie, a partner and Canadian Insurance leader at Ernst & Young noted in a statement. “For example, most customers are open to cross-selling, but insurance companies aren’t taking advantage of these opportunities.”

Telematics in auto insurance is just one example of the power of data that insurers can use, the report notes.

Other technologies, such as video monitors, security systems and gaming systems, can eventually have the same impact on homeowners’ insurance that telematics can have on auto insurance, the report notes.

With this, however, comes privacy issues that insurers will need to address through investing in data security, the report says.

Many insurers in Canada also need to deal with their ageing legacy systems internally, the report notes. “Many P&C companies are in the early stages of investing in internal data and systems capabilities, yet their investment have already provided information advantages and improved analytical and decision-making capabilities,” the report says.

A “shortage of data management talent” is also an issue, and going forward, insurers must “invest in skilled employees who can collect, analyze, disseminate and manage massive volumes of data,” the report says.

Companies may also need to invest in new leadership, such as appointing a chief data officer to lead such a team of data specialists, the report adds.

Overall, the priorities that the company says Canadian P&C insurers need to consider this year include:

• Identifying growth and cost-containment opportunities
• Customer preferences and the distribution network
• Harnessing data for intelligent underwriting
• The changing regulatory and reporting landscape

The continued low interest rate environment and slow economic recovery globally means insurers need to look at new ways to grow their businesses, the report says.

“Insurers can no longer be content with merely maintaining profitability through modest underwriting results,” McPhie noted in the statement. “Acquisitions can provide access to new products, distribution networks and an expanded geographic presence, while insuring emerging exposures can help grow premiums.”