Insurers turn to tech as broker's role in doubt: KPMG

Canadian insurers are leveraging data and new tech to become more customer-friendly as brokers face new pressures, an industry survey from KPMG says.

“With insurers exploring direct-to-consumer services, the fate of the broker is in question,” KPMG’s sixth annual survey of more than 40 Canadian insurers says. The report outlines the industry’s top opportunities and risks for the coming year.

Legacy and past success is preventing many insurers from responding and creating new channels, said Chris Cornell, partner and national sector leader for insurance at KPMG Canada, in the report.

“A lot of insurers have roots in broker-based models, and they can’t simply be tossed out because the industry is in transition,” he said.

To adapt, insurers need to manage their existing business model while building out a direct-to-consumer channel, he said.

While Canadians’ historical dependence on brokers means they won’t disappear overnight, the report says, they’re being forced to adopt products less susceptible to digital disruption.

The challenge is for an industry unaccustomed to consumer interactions beyond onboarding and claims to shift priorities. This means developing a service offering that does away with excessive paperwork, process and complexity.

“When you’re talking about making insurance simple, one of the best plays is to leverage design, digital, and technology to cut through the paperwork, the claims processes, and compliance exercises so that it doesn’t create an onerous experience,” said Peter Hughes, KPMG Canada’s digital services leader, in the report.

While the top risk for organizations was the failure to adapt to customer needs, for the industry as a whole it was the regulatory and compliance burden.

The survey said the industry is viewing new accounting requirements under IFRS 17 as a major challenge. Part of the concern is a “chicken-and-egg scenario,” KPMG’s Dana Chaput said in the report, where insurers are implementing the International Financial Reporting Standards changes without understanding all the capital and tax implications.

Read the full report here.