2016 EY Canadian property and casualty insurance outlook
For Canadian property and casualty (P&C) insurers, 2016 will be a time of uncertainty and change. On the one hand, the sharing economy and regulatory headwinds will continue to disrupt the industry over the next 12 months. On the other hand, consolidation and changing customer expectations will lead to innovation in how insurers conduct their business.
Impact of external forces on the Canadian P&C market in 2016
(0 = Very low impact, 10 = Very high impact)
Digital technologies, such as social media, telematics and analytics, are redefining the insurance market. The impact will affect most business areas, from marketing and distribution to customer service and pricing models.
Competition will heat up as established insurers act fast to capitalize on game-changing market shifts. Challenges will also come from non-traditional sources, such as FinTechs, offering innovative digital solutions.
Services in other digitally enabled industries are causing consumers to demand more personalized experiences from insurers. With the greater opportunity for comparison shopping on the web, the impact will likely be significant.
Economic and financial conditions
Uncertain financial and economic conditions will continue into 2016. Slow economic growth, decline in the Canadian dollar and weakness in the oil and gas industry are major downside risks for insurers.
In 2016, insurers will need to stay on top of changing regulations, implementing risk management processes and increased control functions. In particular, changes to capital factors will have implications for companies investing in technology, equities and foreign investments.
Digital transformation will expose insurers to higher risks from fraud, data theft and political activism. With greater access to sensitive data, privacy breaches will become a bigger worry, as will reputational risks from the use of social media.
The numerous natural and man-made disasters of previous years have been less prevalent in the last year. Despite this fact, globally, climate change and natural disasters are a constant challenge for P&C insurers.
Canada property casualty insurance outlook 2016 - Roadmap for transformation
In 2016, P&C insurers will need to build a roadmap for strategic transformation aligned to new customer imperatives. Refining legacy products and approaches is not enough — what is required is a fresh outside-in approach that starts with the customer and carries through to digital trends and market shifts, both inside and outside the insurance industry.
Specifically, leading insurers will focus on the following path to change:
- 1 Transform operations to drive efficiency, reduce costs, accelerate growth and improve the customer experience
- 2 Shift from a product to a customer experience orientation
- 3 Position your organization for digital leadership
- 4 Develop and attract the right talent to drive change
- 5 Prepare for the next wave of M&A activity
- 6 Create a culture of continuous innovation
- 7 Drive performance through analytics
- 8 Make risk management a key priority