6 issues facing the insurance industry in 2020
The insurance industry is facing a number of challenges in the coming years. Here are six of them.
At SSQ Insurance, our CEO, Jean-François Chalifoux, doesn’t believe in predicting the future. He prefers to plan for it.
This means being on the lookout and ready for the challenges that insurance companies will be facing now, and in the years to come.
1. Digital shift
Consumers have been well immersed in the digital world for years now and are accustomed to highly refined online experiences, starting with Internet giants Google, Apple, Facebook, Amazon and Microsoft.
With increasingly demanding customers who want personalized communications and superior experiences, insurance companies have no choice but to adapt and take the plunge head on into the modern world of technology.
While there are some who have been slow to join the digital experience, most concede that it has helped them develop their relationships with their customers, to become more agile and to accelerate growth.
Online sales are becoming more commonplace. In addition to financial services firms with services offered by advisors, products and services are also sold online through an increasingly refined experience that makes its customers more autonomous.
Obviously this digital shift isn’t free. A return is expected on investments in technology, which means a balancing act for insurers who must move forward digitally at the lowest cost possible while reaching potential customers and keeping existing ones.
They must also stand out from fintech companies emerging on the market with innovative, integrated and multichannel digital experiences.
Putting innovation at the heart of its strategic plan is the best way to stake a claim in an increasingly competitive insurance industry.
Innovation has to be second nature to a company and its culture. Senior management and insurance managers have an important role to play as ambassadors of innovation.
They must be open to new ideas if they want innovation to take root and flourish and resonate with employees.
Innovation must correspond to the company’s strategic imperatives whether it’s to improve customer experience or to become more efficient in operational terms. In all cases, insurers must reconsider their methods and even their business model.
In response to this new reality, insurance companies are keeping an open mind.
Senior Vice-President, Strategy and Product Management
3. Data security
Technology comes with its share of risks and challenges, starting with efficient cybersecurity.
A recent EY survey illustrates the concern insurers have over their ability to protect themselves against cyberattacks. Data breaches are one of the biggest challenges facing insurance companies.
Over the years, companies have collected huge quantities of information on their customers – health, assets, vehicles, etc. This is valuable information that makes insurance companies appealing targets.
To protect data from cyberattacks, which are only getting more sophisticated, insurance companies are using strategies and best practices to find solutions.
Such tactics include the use of advanced analytics and artificial intelligence to have a more predictive management of cyber risk as opposed to an action-reaction model.
4. Talent War
it is predicted that by 2026 there will be labour shortages in many sectors in Canada; a situation compounded by the aging population and baby boomers leaving the job market.
Talent wars involving employers looking for the ideal candidates to move forward is not fiction; it’s a reality that recruiters must deal with right now.
And there are two parts to the dilemma. Attracting talented employees is one thing. Keeping them is another.
Insurance companies are not immune to the labour force shortage plaguing the country at the moment. Which is why companies must be audacious to set themselves apart.
From here on in, developing a strong employee experience and being able to count on an impeccable reputation in the industry will be imperative. These elements are magnets for attracting quality candidates who will contribute to the success of the company.
To hold on to its staff, many insurance companies have adapted and democratized certain practices to please their staff, such as:
- Dress code
- Work schedules
They have to transform themselves into veritable hotbeds of talent where the skills of their staff are put to good use. Fostering career development ambitions is key to an optimal employee experience.
5. Business analytics
It is often said that the right product has to be offered to the right client, at the right time, using the preferred channel of communication.
And this is exactly what insurance companies are pursuing. How do they manage? By using business analytics based on advanced and predictive statistical models, insurance companies can now resolve complex business problems. They analyze data in order to make informed decisions while protecting the private nature of certain information. In this case, data warehousing has to be safe and reliable.
With a clearer picture, they can now propose personalized solutions that meet the varied needs of their customers.
Business analytics also allows for interacting with target clients at opportune moments, conferring a predictive aura that defines the best offer for their clients.
Insurers can therefore trust analytics to develop products based on these data, but also to improve management of customer relations and better manage their operations.
6. Speed and change
With the increasing speed and complexity of change in the insurance industry, the management model must be updated.
It’s time to reinterpret what change means for insurers and embrace agile methods.
To improve the capacity for adaptation in the face of change, it’s better to divide big projects into smaller bites. For this, organizational and technological silos must be broken down. And it would also appear necessary for organizations to identify these different value chains and have coherent orientations for each one, based on a vision and strategic objectives.
Market realities require ongoing evaluation and adjustment as needed based on an iterative, incremental approach. This experimentation, learning and continuous improvement must be present at all levels, from senior management to all employees.
Those who succeed using agility will be those who stand out from the competition by adapting to the needs of their customers. They are also proactive in the development of talent, encourage accountability among teams and promote a collaborative approach.
They will embrace technology, dare to mix things up and reinvent their business processes to encourage innovation.