Insurance was developed to safeguard individuals and their property against unforeseen risks, such as theft, fire, and weather-related incidents. Although insurance can’t stop these things from happening, it can help rebuild afterwards.
In Canada, the insurance industry has a rich history, adapting to the evolving needs of our diverse population. As we look to the future of insurance, there are several trends that are poised to transform the industry. These changes will work to enhance accessibility, efficiency, and sustainability, while addressing new and emerging risks. Due to the nature of its work, insurance must always be based in thorough research and highly aware of changes to lifestyles, habits, and the environment, which is what makes it so complicated, but so interesting.
Just as with every other industry, advancements in artificial intelligence (AI), machine learning, and data analytics are causing insurers to take another look at how they underwrite policies, assess risks, and process claims. Telematics (or usage-based auto insurance) is becoming more and more popular, where drivers are able to lower their car insurance rates by up to 25% through the use of an app that tracks habits behind the wheel. If the app continuously shows safe driving habits, you will be rewarded with lower premiums.
Telematics is also being looked at for assisting home insurance and commercial insurance coverage, and may eventually reward property owners who respond quickly to property maintenance issues, such as consistently monitoring water usage, and who respond fast to worn HVAC systems, wonky water heaters, dead batteries in smoke/CO detectors, badly performing appliances, and who have annual preventive maintenance inspections performed. This should allow for more accurate risk assessment and personalized insurance pricing.
Additionally, blockchain technology is making waves in the insurance sector, enabling secure and easy-to-access record-keeping. “Smart” contracts can automate claims processing, reducing fraud and administrative costs. As these technologies become more widespread, the insurance landscape in Canada will become increasingly efficient, transparent, and customer-centric.
Climate change and environmental factors
Canada is experiencing the direct effects of climate change, including more frequent and severe weather events. This shift is causing insurers to re-evaluate their risk assessment models and coverage options. In the future, there are likely to be more insurance products that are tailored to address climate-related risks, such as flood, wildfire, and extreme weather damage. Insurers may also begin to reward sustainable practices and eco-friendly behaviours through special discounts and incentives.
Cybersecurity and digital protection
With the rise of digitalization, the amount of cyberattacks has grown substantially. For the past several years the insurance industry has been concentrating more and more on cybersecurity and digital protection. Cyber insurance is already an option for home and commercial insurance plans, and covers against data breaches, ransomware attacks, and other cyber threats. As the reliance on digital technology deepens, insurance providers will need to continue to offer comprehensive solutions to mitigate the financial and reputational consequences of cyber incidents.
Canada’s population is aging, with our senior population — those age 65 and older — expected to grow by 68% over the next 20 years. In addition, we are also becoming much more diverse. As the older demographic grows, there will be a greater demand for insurance products related to health care, long-term care, and retirement planning.
The increasing diversity of Canada’s population will also lead to a demand for insurance products reflecting different cultural and lifestyle factors. Insurers will need to be more inclusive and flexible in their offerings to accommodate the evolving needs of a multicultural society.
Shift toward sustainable practices and a customer-centric approach
Insurance companies are recognizing the need to commit to sustainability and environmental responsibility, and are encouraging their clients more and more to use their apps and online resources instead of relying on being delivered printed materials. In addition, clients who invest in “green” technology such electric vehicles and home efficiency products will be able to access more additional discounts.
The future of insurance in Canada is also leaning towards being increasingly customer-centric. Insurers are focusing on providing seamless, personalized experiences to policyholders, including simplified onboarding processes, easy access to policy information through mobile apps, and responsive customer support. As customer expectations evolve, insurance companies will need to prioritize customer satisfaction to remain competitive.
Lane’s Insurance covers Alberta
The experienced insurance brokers at Lane’s always have their eyes on the future of insurance, and are here to help you navigate the often-confusing insurance world. We are a leading Alberta-based brokerage representing Calgary, Banff, Edmonton and greater Alberta. Our brokers work hard to find you the very best coverage at the lowest possible rates, and will always be available to answer your insurance-related questions.