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The future of insurance

Helping insurers build winning business and operating models for the
future

10 min read
The Canadian insurance landscape is transforming. The pandemic
highlighted areas open to disruption, and insurers are set to capitalize
on these new opportunities that have come to the forefront. These
developments give insurers an opportunity to become connected
enterprises by digitizing their services, building stronger connections
with stakeholders, both internal and external, and most importantly with
their clients, to put the customer experience at the heart of their
operations.

Technology supporting agents and brokers to meet the

needs of customers
As the business models for small business commercial insurance shift
and become more modular, insurers will need to pivot their operating
models or be left behind. There is a growing focus on digital-first
products and partnerships. And because insurance is an essential part
of doing business for many small businesses, brokers who can leverage
technology in ways that make it easier for businesses to continue to
make products and serve customers will benefit.
Commercial insurers have historically relied on physical visits by
adjusters to assess, document, and digest loss information and process
claims. Now, however, this cumbersome and time-consuming process is
being revolutionized. Because digital photos of losses can be captured
through drone technology or customer application services, loss events
can be recorded in real time, then validated through independent news
or weather information. This lets insurers process claims and payments
within hours of the loss event. Completely visible to the insured, the
process is entirely transparent and reduces waiting and uncertainty for
the insured. This is transformational for agricultural insurance and
property and casualty insurance.
Insurers are also navigating new and emerging risk classes. Cyber risks
are growing steadily, and whether through their own activities or through
their partners or their financial institutions, many businesses are facing
increased exposure. What about insuring digital assets in the
metaverse? Many companies are wondering how to keep these assets
secure, and insurers will have to address this emerging opportunity. As
technology continues to accelerate rapidly, insurers need to innovate
and offer products that reflect their clients’ needs across different
segments.
Personal insurance becomes agile and diversified
With more people taking ownership of their banking and investment
services, it’s a natural progression to look for greater control over
insurance. Open banking presents a great opportunity for insurers to
improve the customer experience, better understand their client’s
financial picture, and expand their offerings to change the way the
industry is perceived – less focused on selling products, and more
aligned with the customer lifecycle. Facing this emerging disruption of
the broker channel, personal insurers are embracing the mandate of
“digital first, digital now,” making it easy for customers to understand
their options, choose the right coverage, and ask questions in a way
that’s convenient for them, and on their own timeline.
For many customers, better service means having access to insurance
options that precisely meet their needs. Consider a customer living and
working downtown: they might not need auto insurance but could
instead opt for coverage on their motorized scooter. With digitization,
insurers have the tools to embrace niche markets and personalize their
offerings.
Another trend for personal insurers is the continued shift in the value
proposition from protection to prevention. With a growing focus on
wellness, and on consumers’ willingness to share information, insurers
continue to launch products like dynamic pricing for health insurance
based on activity data. The proliferation and adoption of usage-based
automotive insurance will also continue, as insurers look beyond “pay
how you drive” policies to innovate with “pay as you drive.” These
products and features can potentially lead to improved outcomes for
both parties – the customer and the insurer.

Large commercial insurance providers embrace the future

with new operating models
Small insurers are not the only ones adapting to evolving circumstances.
While the large commercial insurance market remains buoyant, it, too,
faces new client and broker expectations, technological disruption,
regulatory complexity, and economic uncertainty. To manage risk and
remain competitive, many are adopting technology-enabled, customer-
centric, and sustainability-minded operating models designed to build
resilience and drive value.
To keep pace with customer expectations, for instance, large
international insurers are eyeing the shift from legacy to agile systems
that enable swift and seamless execution. Clients want more choice
than the standard, 12-month policy, and insurers that can deliver
specialized, flexible products for risk prevention and mitigation will retain
customers and maximize profits.
Nimbler and more aggressive commercial insurers, meanwhile, can
leverage professional expertise, insight-backed decision-making, and
technology to embrace new and emerging risks. With advanced
algorithmic underwriting helping scale their offerings, these leaders can
become innovative specialists and capitalize on niche market
opportunities.
Other organizations apply an "open source" approach that combines the
best risk management and indemnification solutions to cater to diverse
and specialized needs. These insurers thrive by packaging risk into new,
innovative groupings and matching insured clients with capital providers.
This model envisions and services a "stock market of risk" that
transforms the commercial insurance ecosystem as it delivers the best it
has on offer.
Life and health insurers and the journey to enhance the
customer experience
With a handful of large global players and many smaller companies in
the Canadian insurance market, there’s an uneven playing field.
However, with a significant percentage of Canadians remaining
underinsured, there’s potential for everyone to find their audience. One
thing all Canadian life insurance and annuities providers have in
common is their increased focus on improving the customer experience
and cultivating a deeper appreciation for insurance products among
younger demographics.
While existing sales models appeal to many customers, it's less
attractive to tech-savvy customers, who prefer to bank online and buy
financial products on-demand through self-service digital platforms. In
building more effective digital sales tools, forward-looking insurers need
to build systems that improve customer onboarding experience allowing
for an all-digital experience as a default with seamless human support
when needed. Product offerings may also need to be simplified to
support a more customer-centric digital experience that reduces
complexity and allows customers to better understand and compare
their options.
A global trend that we’re seeing is companies reframing their digital
onboarding process in terms of life goals and milestones rather than
products and face amounts, making the intake process more user-
friendly.
Risk classification is fundamental to insurance, and a key emerging
trend is to factor in more granular details from a customer's life
circumstances to deliver more personalized coverage and pricing. For
instance, insurers are starting to reach out to specialized markets
through micro-tailored products, such as annuities for impaired lives,
and insurance against cancer for women at risk or for diabetes patients
based on their management of the disease.
As insurers start to integrate customer data assets into predictive
models and advanced analytics, they'll need to grapple with new data
governance challenges. Going forward, a successful health insurance
and annuities provider is one that is willing to disrupt itself first – before
someone else comes in and does it for them.
The power of connected enterprise strengthens insurers’
connections to customers
The insurance industry faces disruption from many sides, including
technology providers, utilities, and automoThe insurance industry faces
disruption from many sides, including technology providers, utilities, and
automotive companies. In this expanded ecosystem, every insurer will
need to offer greater transparency and increased customer control.
But it’s also essential that insurers understand that consumer
expectations aren’t set by the competition. Instead, a customer
engaging online with their insurer is comparing it to their most recent
experience on a food delivery or ecommerce platform. If the customer
can pinpoint their meal on the map at every stage between the
restaurant and their dining room, or the location of their package at
every stage in its journey between the shipper and their front door, why
shouldn’t they also be able to see exactly what’s happening with their
claim, and where it is in the queue? By connecting strategy to
technology, business capabilities, and customer needs, KPMG
Connected Enterprise helps insurers develop a business approach that
puts consumers at the centre of their operations.
Contact our insurance team to learn more about how KPMG Connected
Enterprise helps align insurance organizations of all sizes so they can
profitably respond to emerging market conditions.tive companies. In this
expanded ecosystem, every insurer will need to offer greater
transparency and increased customer control.

But it’s also essential that insurers understand that consumer

expectations aren’t set by the competition. Instead, a customer
engaging online with their insurer is comparing it to their most recent
experience on a food delivery or ecommerce platform. If the customer
can pinpoint their meal on the map at every stage between the
restaurant and their dining room, or the location of their package at
every stage in its journey between the shipper and their front door, why
shouldn’t they also be able to see exactly what’s happening with their
claim, and where it is in the queue? By connecting strategy to
technology, business capabilities, and customer needs, KPMG
Connected Enterprise helps insurers develop a business approach that
puts consumers at the centre of their operations.
Contact our insurance team to learn more about how KPMG Connected
Enterprise helps align insurance organizations of all sizes so they can
profitably respond to emerging market conditions.

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