Consumers call for innovative transformation

Are Canada’s insurers ready for change?

Life and health insurance has long been regarded as a staid, highly traditional business. But significant change is in the air, according to our survey of Canadian senior insurance executives.

By Melissa Carruthers

Canada’s life and health insurance companies are determined to respond to changing customer needs and the pressures of an increasingly competitive market. What will it take for them to successfully achieve their ambitious plans?

Deloitte recently surveyed senior executives at 15 of Canada’s largest life and health insurers—both banks and insurance carriers—to better understand their strategic focus over the next one to three years. A number of key themes emerged. Insurers are grappling with increased competition, as global players, “insurtechs” and non-traditional startups encroach on their market. At the same time, their customers are demanding the kind of seamless, tailored self-serve experiences they’ve come to expect from retailers and other companies. And across the industry worldwide, a number of large business transformations are in play to drive speed-to-market and improve efficiency.

To respond to these developments, Canadian insurers are focusing on delivering improved digital capabilities and a better customer experience. They’re aiming to apply emerging technologies, big data and analytics to achieve a competitive advantage. And they’re doubling down on innovation in an effort to create new products and services better suited to evolving customer needs.

Canadian life and health insurers are digitally ambitious

Canadian life and health insurers appear ready for a significant push into digital in the years ahead: 80% of those surveyed say they plan to invest in a digitally enabled customer experience over the next one to three years, and 42% say an end-to-end improved customer experience is their top priority over the same period.

Respondents recognize the pivotal role technology, data and analytics will play in meeting those customer goals. Seventy-five percent of them say they plan to use predictive analytics to support product development in the next three years—a sizeable and rather surprising jump from the 17% who currently use advanced analytics within this function today. Majority also plan to invest in technologies to support accelerated underwriting (67%), digital customer experience (80%) and digital marketing (67%). This represents a clear break with the kind of traditional thinking that has long been characteristic of the sector; it’s bold, innovative and ambitious. Are insurers underestimating the scale of the task ahead of them?

Obstacles to overcome

Life and health insurers acknowledge that their existing systems aren’t providing what they need to realize their digital ambitions. Half of those surveyed see legacy systems as one of the key barriers to going digital; 79% feel a lack of data integration and availability hinders their efforts to cross-sell; and 53% report they don’t have a 360-degree view of their customers. Another 46% say they’re currently missing the IT system capabilities they need for real-time processing. Closing these gaps represents a significant undertaking.

In our view, Canadian insurers will need to devote considerable resources, financial and otherwise, to deploy the infrastructures that will support the digital technologies they expect to be able to deliver over the next few years. They’ll need to look at implementing new end-to-end integrated platforms that support straight-through processing. They’ll also want to look at moving high-touch, low-value processes out of the business, whether through automation or outsourcing, to improve efficiency and free up funds for these technology investments and to focus their energy on core business strategic initiatives.

Bringing innovation to life

Along with significant investments in upgrading existing systems or investing in new technologies, Canada’s life and health insurers will need to capitalize on innovation to meet customer needs and battle new competitors. As insurers overcome their current data and technology challenges, they’ll be better positioned to exploit data to deliver new, highly tailored products and services.

How to innovate effectively is a challenge in itself, of course, and one that companies in all industries continue to grapple with. While Canadian insurers are still finding their way through trial and error, it’s encouraging to see that 50% now have a dedicated innovation team in place. It’s especially notable that 86% of those innovation teams are actually separated from day-to-day operations; it’s a strategy that can enable insurers to build new offerings—even entirely new businesses—from the ground up to capitalize on leading-edge technologies, operating models and business thinking. This suggests to us that Canada’s insurers have started to figure out how they’ll innovate, which means they can actually focus on the innovation process itself.


Canada’s life and health insurers are embracing a vision of a digital future, but achieving that vision on their own will be enormously challenging. Partnerships between traditional players and startups, insurtechs and new market entrants will play an essential part in the transformation of Canada’s life and health sectors. Partnering can accelerate innovation, bring new tools and services to market faster, improve data access and integration, enable increased customer engagement and more.

It’s highly encouraging, then, to see that 50% of survey respondents say their companies have already engaged in external partnerships with incubators, startups and the like. And 79% plan to engage in similar partnerships over the next three years. That’s somewhat unexpected—only a couple of Canadian carriers have announced such partnerships, so these figures suggest there’s a lot going on behind the scenes in Canada’s life and health insurance sector. We could be in for some surprises.
Life and health insurance has long been regarded as a staid, highly traditional business. But significant change is in the air, according to our survey of Canadian senior insurance executives. Canada’s life and health insurers have ambitious plans to tackle the customer and competitive challenges they face—we’ll be watching with great interest over the next few years to see what they achieve.

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