Toronto, ON (Apr. 2, 2014) – After a series of catastrophic losses in 2013, Canada’s property and casualty insurers need to focus on improving their bottom line through internal investments in technology and operations. According to a new EY report, this is especially critical for those companies seeking growth via mergers and acquisitions.
“2013 was a record claim year. That posed challenges for many insurers, but has also created some interesting opportunities,” says Doug McPhie, EY Partner and Canadian Insurance Leader. “Increasingly severe weather has forced insurers to focus on improving their underwriting capabilities to sustain their bottom line. But it’s also encouraged them to invest more in other areas to offset those costs.”
The 2014 EY Canadian property and casualty insurance outlook notes that to successfully position for growth, insurers need to understand and focus on the following:
- Product development and innovation, with an eye on expenses;
- Digital technology and analytics;
- Unpredictable weather and catastrophes;
- Regulatory and accounting changes.
“When it comes to developing new products to target emerging risks, technology plays a big role,” explains McPhie. “And more than simply capturing the right data, insurers need strategies for deriving meaningful insights from the information they have.”
McPhie adds: “By combining the power of technology and analytics, many insurers have been making significant strides in creating better predictive models to aid in pricing. Take vehicle telematics, for example. It’s something that has the potential to completely change the industry.”
The report notes that technology can help insurers to better understand risks like flooding, while investments in state-of-the-art integrated platforms can enhance product pricing and improve the customer experience. Still, insurers continue to lag behind other sectors in their implementation of a digital strategy.
“We’ve said it before, but especially after a tough 2013, insurers need to invest in people, processes, methodologies and technology to meet the new requirements for risk analysis, distribution oversight and information transparency,” says McPhie.
Many of the larger insurers are making progress in getting those things under control, and the report notes many are still seeking growth opportunities via mergers and acquisitions.
“We’ve seen significant changes in the largest insurers in the last couple of years, and that trend is likely to continue,” says McPhie. “In this challenging environment, all companies need to work hard to sustain their competitive edge in the marketplace.”
“There’s no doubt Canada’s P&C industry is facing challenges,” he adds. “But by taking advantage of the right opportunities, companies can set themselves up for positive results going forward.”
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