Accelerated digitization continues to drive strong M&A activity in P&C, with brokerages that prioritize the customer in their digitization strategies more likely to succeed.
“Understanding the customer and how to change the customer experience will be the key differentiator for brokers going forward,” Philip Heywood, partner and national financial services deals leader with PricewaterhouseCoopers (PwC) Canada, told Canadian Underwriter in an interview discussing PwC’s Mid-year Canadian M&A Industry and Market Trends report.
In the race towards digitization, there will be winners and losers.
“Historically the broker relationship was the primary driver of value. Now the primary driver of value is the customer experience and ease of doing business,” Heywood said.
Brokers who are able to “leverage digital capabilities to truly understand the customer and create an efficient, seamless end-to-end customer experience with fully tailored products” — as well as superior omni-channel service and claims handling — will succeed, he added.
In light of this, more brokers and insurers will look to partner with insurtechs to enhance the customer experience, predicted Keegan Iles, partner and national insurance consulting leader with PwC Canada.
“Accelerated digitization will become about mass personalization,” Iles said. “Brokers who want to continue to provide value will ask themselves how they can personalize significant customer insights to tailor products and better serve customers at scale.”
While historically there have been more partnerships between P&C firms and insurtechs in the personal lines space, Iles said there has been more focus on achieving the same successes in commercial lines over the past year, and this is expected to continue.
“Insurtechs are creating an ecosystem where they can help solve issues in the value chain for brokers and carriers. Brokers will continue to own the client relationship but will leverage insurtech partnerships to help solve the customer experience piece,” Iles said.
Independent brokers, in particular, have “huge potential to leverage digital marketing tools and show value and quality to clients and carriers,” Iles added. “But in order to remain independent and not be left behind, they will need to harness the right partnerships and adopt digital-first strategies to engage with customers in new, meaningful ways.”
Asked how brokers can best do this, Iles answered: “Focus on the fundamentals of your business, customer segmentation and service, and being lean in everything else you do. Invest in the right broker management platforms that support these capabilities — and there are a lot of homegrown Canadian options. Become more agile in your service delivery, and redeploy your efforts as needed to fuel growth where the most value can be added.”