The Canadian property/casualty industry is facing several trends, which insurer CIOs can seize as opportunities to have an impact on growth and profitability. Auto loss severity is driven by increasing repair costs as vehicles contain greater amounts of tech, such as cameras and sensors. It is also evidenced by more frequent finding of total loss. Frequency is climbing as the incidence of distracted driving becomes more prevalent. This margin pressure is driving carriers to revise products and rates on a more frequent basis, highlighting the need for modern policy admin systems that can respond in a timely and cost-effective fashion.
Likewise, property risks are buffeted by weather-related losses, including CAT activity, that are pushing loss ratios higher—but not high enough to tap CAT treaties. Improved data and analytics can support greater precision of underwriting by basing pricing on the exposures of the property’s actual location rather than its postal code. Augmenting existing data sources with aerial imagery and third-party data can enable better understanding of construction, occupancy, and exposure.
Customer loyalty is in decline, with more frequent shopping at renewal. Investment into customer insights to better understand churn propensity, customer lifetime value, and next best action combined with digital efforts can improve retention and effectiveness of customer acquisition efforts. In addition to traditional third-party data offerings, carriers are leveraging AI capabilities applied to social media and other big data sources to generate improved 360-degree views.
The consolidation of distribution continues unabated. Larger producers have more capabilities and higher expectations. Plus, they are incentivized by their carrier partners to concentrate their production with fewer carriers. In many instances, producer-facing digital investments have disappointed insurers—agents are often reluctant to access each carrier’s portal individually. Novarica is witnessing increasing levels of investment in API strategies to facilitate direct connections to carriers’ modern, service-enabled cores.
The business outlook is positive yet challenging. The most effective response to these challenges is smart, well-executed technology investments. The need for effective IT leadership will only continue to increase.
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