2015 Canadian life - annuity insurance outlook
Based on our 2014 Global Insurance CFO Survey, the top business drivers for life insurers around the world over the next few years will be to achieve growth, relieve pressure on costs and margins, improve profits and respond to regulatory change (as shown in figure 1). These challenges are evident in Canada’s life insurance and annuity industry.
Despite several years of slow-to-no growth for providers of life insurance and annuities in Canada, multiple opportunities to gain competitive stature beckon nonetheless. Successful providers in 2015 will develop strategies to provide products to developing consumer markets that are currently underserved. Examples include the growing, yet unmet, financial protection and savings needs of the mid-market sector and Generations X and Y.
To effectively serve these markets and address rising consumer expectations, growth-oriented providers will incorporate new approaches using digital technologies, data analytics, mobile tools and social media.
Consumers seek life insurance and annuity products that are easy to understand and compare, and can be acquired in a streamlined transactional environment. Digital solutions promise this greater efficiency, but many providers have yet to embed technology as an integral part of their culture, and hire the talent to implement it.
In 2015, the onus is on providers to integrate data analytics with customer experience, underwriting, market segmentation and acquisition, risk-based pricing, distribution strategy, claims optimization, liabilities valuation and reporting. More insurers need to consider the value of an omni-channel distribution platform to interact and transact digitally with brokers, agents and consumers; encourage self-service customer experiences; and achieve cross-selling opportunities.
At the same time, providers must contend with growing regulatory pressures to enhance their compliance and control functions. Insurers must demonstrate that they have implemented sound governance programs to address their organizations’ key risks and functions.
Canadian life insurers and annuity providers that recognize the forces of change and take quick action to leverage market opportunities will improve their competitive positions in 2015.
In this regard, insurers must consider the following actions:
- Reposition to address underserved markets
- Invest in digital and analytics
- Proactively address the new regulatory regime
- Enhance data security