TORONTO, ON, JULY 25, 2022/insPRESS/ – With the Canadian Insurance industry facing a myriad of unpredictable changes, carriers need to rethink their organizational strategy and transformation efforts to ensure they are ready for whatever the future may hold.
That’s why we spoke with industry-leading executives about their thoughts on the challenges ahead for Canadian insurers, and where they think the industry is headed. Starting off with Marc Lipman, President & CEO of Lloyd’s Canada, who summed up the state of affairs:
“There’s an acronym the Harvard Business Review uses to summarize our current environment: ‘VUCA’. Volatile. Uncertain. Complex. Ambiguous. This environment presents both opportunities and challenges for the insurance sector”.
Lipman stresses the particular challenges the Canadian P&C industry faces, given the highly regulated environment, both at the federal and provincial level. He notes, “the demands that are imposed by significant regulation are not always conducive to highly innovative culture that promotes a “fail fast, learn and move on” strategy. Failure when it comes to various obligations owed to our policyholders and business partners is just not an option”. He goes on to highlight the particular struggles from the current talent drain, “the fight for talent has never been so fierce and the cost of innovation is a real consideration that has to be measured against the anticipated economic benefit of the innovation. Oftentimes the real obstacle to innovation and doing things differently is cultural. Radical thinking requires radical cultural shifts and that isn’t always easy (or painless)”.
When asked about future trends for the industry, Lipman sees two key areas:
- Growth of the insurance marketplace: “Awareness of insurance is higher than ever following the disruption of the pandemic and various recent catastrophic weather events. The Lloyd’s market is planning for approximately 15% growth in 2022. Premium income from Canada increased by more than 20% in 2021”.
- Higher levels of institutional capital entering the insurance marketplace. “Whether it is through direct investment, or through ILS vehicles, like Lloyd’s London Bridge platform that provides an access point for investors to deploy funds in the Lloyd’s market. Ontario Teachers’ Pension Plan was the first high profile investor to take advantage of this vehicle in November of 2021, and I would expect further investment from various capital providers across the entire insurance industry”.
Furthermore, Lipman certainly sees opportunities for the market, one such theme from the conversation was partnerships. He states “I think the way we overcome these issues and rise to the challenge is by collaborating more effectively. The path forward demands more effective partnership between traditional carriers and insurtech, and a permanent departure from the “disruption” narrative that foresees the demise of the traditional insurance company at the hands of Insurtech. What’s important here is that we get as many people from as many different backgrounds together around the table – not just the (re)insurance sector, but also professionals from other industries, specialists from emerging disciplines like AI, academia, government, and elsewhere. That’s how we can fast-track the creation of new products, platforms and processes”.
Lipman also noted the success of the Lloyd’s Lab, which has welcomed 90+ start-ups since it’s creation in 2018. “The solutions they’ve delivered range from parametric covers for tropical storms, to smart alert systems for cyber-attacks. This year we welcomed our eighth cohort of start-ups, with a stated focus on climate innovation. We’re excited to see what’s in store for the Lab as it continues to support and accelerate start-ups”.
Download the full report here to read more on these topics from other senior executives at Sunlife Financial, The Co-operators, Medavie Blue Cross, and Great-West Lifeco.
Marc Lipman will be speaking at Reuters Events: The Future of Insurance Canada 2022 (September 13-14, Toronto) alongside 40+ leading executives from the Canadian insurance market. Check out the website for more details.