Brokers taking the initiative to embrace digital transformation: Insurance Analytics Canada speaker

Many brokers are taking the bull by the horns and embracing digital transformation, with or without the help of insurers, a speaker suggested last week at the Insurance Analytics Canada Summit in downtown Toronto.

Greg McCutcheon, president of Markham, Ont.-based Opta Information Intelligence, noted in his presentation that insurers are not able to embrace every single broker, so brokers are taking it upon themselves to transform digitally.

“I’m actually looking and working with brokers across Canada right now that are not waiting for the insurance companies to enable them with technology; they’re taking matter into their own hands,” McCutcheon said during his presentation, titled Future of Insurance: How Will Digital Innovation Disrupt the P&C Space for 2020 and Beyond? “And their ideas and thought processes are in many cases really, really entrepreneurial, revolutionary in some ways. Right now, I’m pretty impressed with some of the brokers out there in Canada that are working hard to drive digital transformation and I’m also really pleased to see insurers being much more flexible in helping these broker distribution channel partners grow and change and be more relative to this experience for customers.”

While McCutcheon acknowledges that there will be consolidation in the broker space, “if you’re not onboard thinking about analytics and the changing transformation of insurance, which has been a pretty traditional process, you’re on the bus or you’re left behind,” he told attendees.

The change, McCutcheon suggested, is based on consumers’ need for choice and the evolution of technology, which is “driving change across all of our markets.”

For auto and property lines, it may be difficult for brokers to compete. On the commercial side, there is a lot of insurers that want to have the informed expertise of the broker, McCutcheon said, adding that he is “seeing a migration both on the underwriting side and in the broker community to move to pre-filled commercial solutions and small commercial online direct-to-consumer packaging.”

In underwriting, McCutcheon argued that underwriters “have an awful hard time letting go of questions because it makes them uncomfortable, but they’re getting there.” Some many have not have enhanced their present sophistication as clearly as they want, “or perhaps the need to ask more questions also suggests the organization is afraid about the risk and therefore prices higher because of the fear of this digital consumer who may be coming to me that I may not know that much about and I may have concerns.”

“So I think that the industry as it goes down this journey on pricing will evolve as well, and has to evolve,” McCutcheon said during his presentation. “If we don’t change as any industry, our clients are going to demand this change.”

This change could evolve into a product that is more flexible and tailored to the consumer, which “creates a lot of opportunities for the insurance communities – new products and solutions, unbundle, provide new offers.”

Data analytics is also providing a vast opportunity for insurers, McCutcheon said, noting that it not only provides information about features of a particular house, for example, but who the individual is and if they have a vehicle.

“By the way, I know that that homeowner is an executive on the move and from a profile perspective, what does that mean to me?” McCutcheon asked. “And also that they own a business, there’s a registered business attached to that person. So for the first time, quoting a personal property can lead to also a quote on an auto and also, ‘Hey, by the way, I think you have a business, would you be interested in commercial insurance?’ That didn’t exist before and we’re very, very excited about that opportunity in a mobile, online basis.”

On the commercial side, McCutcheon said Opta’s first predictive model has 14 different liability scores. For example, “in the case of this café, we know the restaurant, we know the hours of operation, we know if they serve liquor, we know what the patron reviews have been, we know if the owner operators have been in financial difficulty and that is well beyond what traditional commercial underwriting submissions every contained in the past.”

While many organizations remain siloed, embracing actionable insights will lead to amazing results, McCutcheon concluded. “If you had told me five years ago that we would accurately predict wind and hail in Alberta by rooftop location, I would have told you you were crazy,” he said. “We’re doing that and all other perils. These models test against five years of past claims history information and show they are very strong. It’s accelerating.”

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