January 17, 2019 by Jason Contant
Expected weak insurance sector growth in the near-term is fueling the need for efficiency gains through technology and innovation, Ernst & Young Canada said recently.
The EY Insurance Outlook 2019 reveals that insurance sector growth is expected to remain weak in the near-term, demanding greater focus on technology and innovative initiatives to optimize costs and drive wider distribution, market reach and niche market opportunities.
“Margin pressures are straining the growth potential of many insurers in Canada,” said Janice Deganis, EY Canada insurance leader, in a press release earlier this week. “Digital transformation is no longer optional, but absolutely necessary to optimize costs and reinvest in future-focused areas of the business that generate results.”
A prolonged soft market is squeezing margins and creating more focus on technologies that can create efficiency, agreed Jeff McCann, CEO of Digital MGA Marketplace Ltd., a Vancouver-based company that helps brokers with automation solutions. McCann told Canadian Underwriter Monday that he has also seen an emergence of customer engagement technology as consumer expectations change, driven by mobile, immediacy, and new data-backed, customer-centric business models.
“It is a mistake to think that digital means ‘without people,’ but that seems to be the general thinking in the broker community,” McCann added. “Brokers hang their hat on advice and counsel, then spend half their time on paperwork or processing functions. There needs to occur a fundamental shift in thinking about technology as a tool for brokers to fulfill that service promise by better empowering the individual broker, producer or CSR to do their jobs.”
Insurers are also facing “immense pressure to modernize their businesses, while at the same time managing increasingly complex actuarial and accounting standards,” said Paul Battista, EY Canada financial services leader.
EY Canada has launched a new EY Centre of Excellence for Insurance and Actuarial Services. Based in Toronto and Québec City, the centre will work with insurers to digitally transform their businesses through adopting a more effective use of technology.
The centre will also help insurers comply with regulatory changes like IFRS 17, an accounting standard that will affect insurers’ financial statements. Services will span integrated test and validation management service for IFRS 17, as well as access to on-demand services for various actuarial, accounting and tax needs – delivered by a national team of specialized professionals.