Aluance is in Lac-Leamy October 9th-10th, joining fellow insurance innovators to discuss digital transformation. See you there.

Canadian insurers and insurtech startups will descend on Gatineau, Quebec – just across the river from the nation’s capital, Ottawa. The back-to-back InsurTech North and National Insurance Conference of Canada events feature pitches, presentations, and networking opportunities for startups and incumbents alike.

Facing Challenges

“Most insurers were stuck with legacy systems and have not been very proactive in investing in technology until very recently.” – Walter Rondina, KPMG

Canada is emerging as a powerhouse in artificial intelligence and is a leader in digital transformation. Canadian insurers are aware digital innovation is their future, and according to a KPMG survey of insurance executives, 81 percent want to do the disrupting. They do, however, face some hurdles.

One major roadblock to Canadian insurers: those dinosaurs lurking in the server room.

“A lot of insurance companies are finding it a challenge to adapt right now because they haven’t been extremely innovative in the past. Most insurers were stuck with legacy systems and have not been very proactive in investing in technology until very recently. Now, the pace of change and innovation is a lot faster than what they’ve been used to, and they’re finding themselves ill-equipped to keep up while being threatened and disrupted from all sides.” – Walter Rondina, Partner, Management Consulting, KPMG Canada

Free of such legacy systems, insurance startups are able to nimbly change course to support a new insurance product or augment customer experience. Working with these startups allows large insurers to innovate without the legacy burden.

Another roadblock to Canadian insurers and insurtechs alike: regulatory red tape. Half of insurance executives in the KPMG survey list this as a challenge going into 2019 and beyond.

Regulators must find a balance between protecting insurance customers and allowing the industry to grow. Industry newcomers especially can find it difficult to navigate Canada’s regulatory landscape, often facing different rules in each province or territory, and with capital requirements hard to meet on a tight startup budget.

The good news is Canadian insurance regulations are catching up, and Quebec’s financial regulatory body, Autorité des marchés financiers (AMF), has declared the province “open for business” for insurtechs and fintechs. Other regions are now watching Canada as a hub for regulatory innovation.

Innovation Through Partnerships

“We now have the flexibility and speed to solve new insurance problems facing Canadians.” – Rob Wesseling, The Co-operators Group

To bypass their legacy systems, large insurers are leveraging partnerships to bring new products to market, fast. One example is the Co-operators’ new duuo insurance product for homesharing. Customers turn the insurance on and off as needed when they rent space in their home, for as little as $8 a day.

The Co-operators used the Insurance Cloud Services (ICS) platform created by Slice, who have an office in Ottawa.  Using artificial intelligence and data analytics, ICS provides a base for insurers to build a new product, free of legacy systems.

“I cannot think of a time in the Canadian insurance industry where an entirely new product has been built within two months of announcing intention to create a product from scratch,” says Rob Wesseling, President and CEO of The Co-operators Group Limited. “This is the power of Slice ICS, as even a year ago this type of innovation was not in our traditional insurance product roadmap. We now have the flexibility and speed to solve new insurance problems facing Canadians.”

Slice’s impact goes well beyond Canada’s borders. The insurtech, conceived only three years ago, also partnered with XL Catlin to provide a cybersecurity product, alerting small and medium businesses to real-time risks.

“As a Canadian company, we feel we have a global lead,” says Tim Attia, CEO of Slice. “Even in the U.S., we’re considered one of the leaders in our space. We’ve got opportunities that are coming to us all over the world, and we feel that we can (dominate) the market.”

Innovation Through In-House Programs

Canadian insurers are not waiting around for innovation to happen. Desjardins, for example, was the first Canadian insurer to offer an iPhone app way back in 2010 and now offers car insurance customers the Ajusto telematics app. They have hosted the Cooperathon hackathon since 2016, after opening their innovation lab the year before. Through their lab and events, this insurance incumbent is encouraging both employees and outside startups to develop the next insurtech innovation.

Beyond these initiatives, Desjardins is investing in and partnering with startups to improve their insurance offerings. For example, since Canadians face about $2 billion per year in basement flooding damage, the insurer has incorporated Roost sensors into their Alert product. The connected sensors immediately inform a homeowner of a leak, helping reduce or prevent water damage claims.

Meet Aluance at InsurTech North

Aluance Digital will be at InsurTech North. Our founder and Chief Digital Strategist, Ayaz Somani, will be happy to meet you there. If you have questions about digital strategy, insurtech, or just want to learn more about what we do, reach out to us.

See you in Gatineau!