EY’s 2017 Life Insurance Outlook identified technology as a dominant force that will shape Canada’s life insurance industry over the next year. Complex regulations, a talent crunch and customer-driven innovation are other forces impacting the industry.
Janice Deganis, Insurance Leader, EY (Ernst & Young), says that "Life insurers face difficult challenges this year that will add pressure to an industry already in a period of sustained transformation. Insurance leaders should be finding ways to unlock value from tough new regulations, remain laser-focused on new technologies, like robotics, and at the same time, attract new talent."
One of the dominant forces is regulation, which scored a 9 on a scale of 0 to 10 on how impactful it was on the life market. Increasing regulations and new accounting standards are expected to make it more difficult for insurers to benefit from potential opportunities.
Technology, is also a dominant force, scoring a 9 on the scale. With the development of robotics, analytics, and InsurTechs, for example, technological advancement is expected to redefine insurance.
The economic environment was scored an 8 on the scale. There is increased pressure on insurance margins due to global economic weakness, low interest rates, poor growth in Canada, and political changes in the US and EU.
Next comes customer expectations, which scored 7. Customers will expect more digital, personalized experiences, and simpler products and a holistic approach will increase in importance.
An increasing talent shortfall
Finally, talent, also scoring 7, comes up as a new dominant force when compared to EY’s outlook from last year. Insurers are seeing an increasing talent shortfall, as more insurance professionals retire. With digital transformation, there will be an increase in demand for skills in data science, cyber-risk management and blockchain innovation.
"Vigilance in both understanding and adapting to these emerging forces will be the key for positive transformation of Canada's insurers," says Deganis. For more information, read the full 2017 EY Life Insurance Outlook and the 2017 EY P&C Insurance Outlook.