Canadian P&C insurers must heed customer preferences to grow, says EY
Investments in infrastructure and technology will be critical to success
(Toronto, 4 April 2013) From new product development and marketing to distribution, Canadian property and casualty (P&C) insurers that harness the vast volume of data available to them to gain insight into customer preferences and behaviour will be better positioned for growth, says EY.
“Insurers cannot underestimate the power of the consumer,” says Doug McPhie, partner and Canadian Insurance Leader at EY. “Developing pricing and distribution models that accommodate customers’ expectations is critical.”
EY’s 2013 Canada property-casualty insurance outlook notes that by harnessing “Big Data” to look beyond traditional analytical tools and capabilities, insurers can better meet customers’ needs, and improve their cross-selling and retention initiatives.
“Integrating and leveraging data throughout the insurance sales cycle can improve underwriting, customer service and claims experience,” explains McPhie. “For example, most customers are open to cross-selling, but insurance companies aren’t taking advantage of these opportunities.”
To succeed in the face of evolving market forces, EY outlines the following priorities Canada’s P&C insurers need to consider:
- Identifying growth and cost-containment opportunities
- Customer preferences and the distribution network
- Harnessing data for intelligent underwriting
- The changing regulatory and reporting landscape
“Insurers can no longer be content with merely maintaining profitability through modest underwriting results,” says McPhie. “Acquisitions can provide access to new products, distribution networks and an expanded geographic presence, while insuring emerging exposures can help grow premiums.”
But these growth strategies don’t come without risk. Insurers must exercise care when integrating different company cultures, systems and accounting and reporting policies, and overcome a lack of historical information when offering new products.
McPhie adds, “Profound change in the area of customer behaviour and expectations — combined with expanding regulations governing insurer risk and capital management — continue to challenge Canadian P&C insurers. Going forward, they need to carefully balance growth and profitability strategies with the associated risks.”
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