EY Canada outlines three key priorities to ‘reinvent’ insurance
EY Canada outlines three key priorities to ‘reinvent’ insurance | Insurance Business Canada
Insurance News
EY Canada outlines three key priorities to ‘reinvent’ insurance
Annual outlook emphasizes ‘transformational market headwinds’ in the industry
Insurance News
By
Gia Snape
Embracing digitization has become a top priority for Canadian insurance companies as the industry faces transformational market headwinds, according to EY Canada’s annual insurance outlook.
“Emerging global risks, whether it’s climate change, geopolitical events, inflation, or supply chain impacts, are translating very much into the Canadian market,” said Jennifer Baziuk (pictured), partner and business consulting insurance leader at EY Canada. “There’s quite a bit that insurance companies are going to need to focus on in the future.”
Chief among those priorities are leveraging cloud innovations to tighten their operational efficiency, refreshing their talent agenda, and embedding environmental, social, and governance (ESG) priorities into their strategy, the outlook said.
Compounding the challenge for insurers is a dramatic shift in consumer’s demands, brought by high levels of digitization in other industries and generational differences in insurance needs.
The shift drives home the urgency with which insurance companies need to become agile and deliver digital-first customer experiences, Baziuk told Insurance Business.
“We’re seeing evolving demand for more personalized policies of protection,” she said. “Consumers are looking for more unique individual and situational solutions, and insurance companies need to respond to that.”
Where are Canadian insurers in their digital transformation journeys?
Canadian insurers are at different stages of digital modernization depending on the size of their organizations. But while there’s no “one-size-fits-all” approach to modernization, every organization will need to adapt multiple initiatives as new capabilities come into play.
“The larger, tier-one insurance carriers that have been investing in their core platform transformation for many years, going back 10 or 15 years, are now focused on moving into the cloud to support the shift to more real-time solutions.
“They want the ability to leverage data sharing within their ecosystem, and this speaks to the need to have more API to enable more streamlined data sharing across their partners, which ultimately allows them to respond to consumer needs faster.”
Meanwhile, mid-tier carriers are still moving from legacy platforms to new core systems. The biggest challenge for these organizations is upskilling their exiting workforce as they continue their transformations.
“We’re seeing a lot of core modernization programs where mid-tier organizations are trying to understand how to retire old platforms, but at the same time, they’re also being hit with this cloud innovation,” Baziuk continued. “So, they need to take on all of this without the skills or the capabilities.”
Ultimately, insurance companies need to be able to lead a digital-first strategy to ensure they’re creating an effective technology roadmap for their future business, EY’s outlook concluded.
How does digital modernization impact insurers’ approach to talent?
The other transformation that should occur alongside insurers’ digital overhauls is in their talent strategy.
“In order for insurance companies to be able to thrive in this environment of disruption, leaders need to start looking at their talent strategy as an actual transformative imperative,” Baziuk stressed. “It’s not just about recruitment and training, but about making sure that their workforce can adapt to new ways of working.”
Employers need to evolve the skills landscape within their organization so they can maximize their existing employee base without needing to go to the market for new skills. At the same time, they need to anticipate the need to hire for high-demand skills that are in short supply.
Insurance roles themselves are evolving as companies embrace artificial intelligence, automation, and other innovations, Baziuk noted, and more traditionally valued experiences and skills sets are going to start becoming less of a priority.
“Companies aren’t really scaling back on these more traditional roles, but the roles are transforming, and so you’ll see a traditional insurance underwriter today in the future will start to look like a digital underwriter,” she said. “The roles will evolve into new responsibilities that are going to be enabled by data and technology.”
How can insurers focus on ESG priorities?
Finally, EY Canada’s 2023 outlook stressed the growing prominence of ESG on insurers’ priority lists. The industry is highly engaged in their sustainability strategies and initiatives,
Nearly all insurance companies in Canada are developing and launching socially responsible fund options aligned to ESG goals, the outlook said.
In terms of outward-looking ESG priorities, most firms have defined emissions targets for their operations, EY said. Property & casualty (P&C) claims operations were highlighted as a having high potential to achieve further reductions.
However, insurers must continue to put ESG considerations at the forefront of their business decisions, including product design and fund investments.
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