Insurance Trends – Technology Everywhere

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By Doug Grant, CIP, Partner, Insurance-Canada.ca

Toronto, ON (Dec. 5, 2016) – For years, I have heard variations on a single refrain echo through the insurance industry: “Why is insurance so far behind in technology?” By implication, insurance languishes in the dark ages while other industries are challenging the outer reaches of space. I have always felt that if you considered the complexities of insurance products, the comparison was not entirely fair or valid.

But the tide seems to be changing. Many in the insurance space are tackling new and innovative ways of processing the business, underwriting, handling claims, creating product, and communicating with customers.

It was a privilege for me and for Patrick Vice – editor of the Insurance-Canada.ca blog, the Intersection – to introduce the Globe and Mail‘s annual “Insurance Trends” report.

We commented on the insurance sector’s preparations for the wave of new technology. Although the two examples of technology – drones and autonomous cars – will probably create or enable major changes in many industries, they are big for insurance, whether as products to insure or as tools for the industry to use, or both.

The rapid change in new technologies has pushed industry players to be more agile, fast-paced and responsive to change in order to take advantage of opportunities that arise. The article about Aviva Canada – “Digital + Insurance = Industry disruption?” – notes that culture change needs to be part of this.

Analytics has become a significant set of tools within the insurance processing space. In “Advances in research and technology are making insurance more accessible” about Manulife and HUB Financial, improving the customer experience is important for not only how the industry communicates and transacts with its customers, but can make a real difference at the insurance product level.

As a technology-driven example, there is the steady rise of self-driving or autonomous vehicles. Craig Tilford has worked extensively in the insurance industry and has a background in driver safety stretching back two decades – spanning committees, police, corporations, and exotics in Canada and US. He comments:

As a high performance and safe driving instructor of thousands of people for more than two decades, I welcome the autonomous car. Last night around the table, the consensus was drivers want to remain in charge and don’t trust the technology. When I pointed out that 80% to 90% of all crashes are human error, it fell on deaf ears. I’ve fought this closed-mindedness for over 20 years.

When I ran schools full-time, more than ten years ago, there were 3,500 Canadians dying each year in auto crashes. Now it’s only – ONLY – 2,500! All improvements are not because we are getting better at driving, fewer cars on the road or better weather. It’s the constant march of cars getting better and safer. I drove a Tesla in a snow squall last winter, on automatic. Even the Tesla representative couldn’t believe the car could read the road with snow blowing and blocking the side or middle of the road.

Bring on the autonomous vehicles. And please continue to educate both the public and the insurance industry on the benefits which far out weigh any small negatives.”

Insurance is evolving both in product development and in customer engagement towards more management of risk – examples abound – and somewhat away from indemnification. The promise for autonomous vehicles is a dramatic reduction in accidents which everyone agrees is a good thing. It also means dramatic reduction in insurance claims and premiums for a huge line of business in the industry.

Disruption, or more simply, rapid change is coming from all directions. Enjoy the ride, but look for the opportunities.

Click here to read the complete Globe and Mail “Insurance Trends” report from Nov. 30, 2016.

About Insurance-Canada.ca

Since 1995, Insurance-Canada.ca Inc. has provided both consumers and insurance professionals with independent and impartial information about technology and the business of insurance in Canada.