The Future of P&C Insurance

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David Burnie shares the second article in a series on the future of P&C insurance in Canada. 

In our first article outlining the future of P&C Insurance in Canada, we discussed how insurers have been and are continuing to invest in digital transformation agendas in an effort to reshape distribution and service in an industry that has been relatively slow to adopt modern business practices. We illustrated how the sector will evolve by focusing on how consumers (both individuals and small-medium enterprises) are beginning to interact differently with carriers and brokers to obtain new policies and have them serviced once those policies are in force.

In part two of our three-part series, we focus on how insurers are changing their underwriting and pricing practices to be more sophisticated, efficient, and profitable.

Underwriting and Pricing

From an underwriting, pricing, and risk selection perspective, two factors will impact risk assessment, pricing, and underwriting in the future:

Data collection and use

Increased use of automation and integration of technology

Data collection and use

Concurrent to the digital transformation wave is the rise of big data. As a result, many insurers are looking at their enterprise architecture and setting up data lakes in the hopes of realizing benefits down the road. The promise of these benefits is high as the variety, velocity, and volume of data continues to increase, and insurers create the infrastructure, capability, and culture to exploit this data. Historically, external data sources have been expensive in Canada relative to other geographies, such as the UK where much of the data used for selecting and pricing risks is free. Still, the provincial regulators and collaborative organizations such as the Centre for Study of Insurance Operations (CSIO) understand how valuable data can be to the industry. Data enables insurers to underwrite and price policies more effectively while serving customers better, improving combined ratios, and passing collective savings on to customers.

 

Key points include:

  • Intake & Triage
  • Risk Assessment and Pricing
  • Underwriting Processes

 

Read the full article, The Future of P&C Insurance in Canada: Part 2 – Underwriting and Pricing, on the BurnieGroup.com.