This IDC Perspective provides a state of the nation with respect to digital transformation (DX) initiatives in the Canadian insurance industry. The insurance industry in Canada is proceeding with digital transformation initiatives at varying paces driven mainly by a desire to reduce operating costs. While some have introduced direct to client sales and support channels, this must be done carefully to avoid antagonizing the insurance agent community that handles most sales today.
The most significant digital transformation initiatives today involve core systems enhancements and the automation of insurer and agent system channels and interfaces to increase process efficiencies. Because the brokers effectively own the client, there is little opportunity for insurance companies to establish direct client interfaces that would emulate the direct digital links banks have with their clients.
Fintechs are starting to become more prevalent in the insurance industry, but none are perceived as significant threats by the insurance establishment. The most successful insurance product vendors precede the fintech era and because of their formidable knowledge can outmaneuver fintechs trying to become vendors to the insurance companies.
Other than well-established direct to consumer insurance sales organizations, no disruptive fintech-driven competition has materialized. The insurance industry is ripe for the introduction of transformative DX process because of the inefficiencies that exist within the distribution channels. "The key question is will more efficient insurance business processes be introduced by incumbents via digital transformation or will some disruptive forces that are not clearly evident today totally change the insurance industry," says Robert Smythe, research associate, IDC Financial Insights.
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