Welcome to the era of ultra-personalized insurance. New types of products and services are available to Canadians through a growing number of channels and, increasingly, consumers are purchasing insurance tailor-made for their personal needs.
While traditional policy categories and annual commitments still exist, insurers are launching innovative forms of insurance that break the historic mould, such as insurance that you activate and deactivate as warranted or premiums based on your behaviour – demonstrated by data – instead of your demographic risk profile.
Digital monitoring technologies and connectivity are fuelling much of the transformation. “All the sensors and connected devices in our homes, vehicles and fitness devices are generating tremendous amounts of data, and data is the new gold,” says Doug Grant, partner at Insurance-Canada.ca Inc., an organization that provides independent information about technology and the business of insurance. “Using analytics and AI, you can understand your customer much better and make them offers or add products they tell you they want.”
This wealth of data is allowing insurance companies to be more proactive in risk management, says Mr. Grant. Examples include vehicle telematics that reward safe drivers and premium reductions for homeowners who install sensors that warn of dangerous water leaks.
“The traditional model was based on the understanding that if something goes wrong, I will indemnify you for the loss,” he says. “With this shift, the insurer is giving you tools to reduce your risk, and both parties benefit when insurance claims are reduced.”
Personalization of insurance is enabling new forms of usage-based policies. That principle motivated CAA Insurance to take a non-traditional approach with the launch of Canada’s first pay-as-you-go auto policy, CAA MyPace.
“Our goal is to give the motorists who rely on our insurance choice and control over how they benefit, based on their lifestyle and their stage of life,” says Matthew Turack, president, CAA Insurance. “MyPace is most beneficial for people who don’t drive very much maybe because they use public transit for work or are retired. Motorists pay in increments of 1,000 kilometres driven.”
Low-mileage drivers with this policy are saving an average of 40 per cent in premiums, says Mr. Turack.
CAA is also a big provider of travel insurance via its Orion Travel Insurance Company, and innovation is happening in that sphere as well. For example, the company’s emergency medical travel insurance now offers policyholders virtual health-care services. “We’re providing the opportunity for people who get a minor ailment while travelling to get telemedicine, linking with a physician through a secure video link. It is another customized offering that responds to consumer needs.”
In addition to technology changes, insurance providers are also responding to significant societal change. As VP of Emerging Business Models at The Co-operators, Peter Primdahl works to identify opportunities for new types of policies and delivery channels.
“The nature of work is changing with the ‘gig economy,’ and consuming is changing – moving away from ownership to access,” says Mr. Primdahl. “Changes in the ways we live are creating new risks, and by addressing these and facilitating participation in this economy, we hope to help people improve their financial security in this new era.”
We’re providing the opportunity for people who get a minor ailment while travelling to get telemedicine, linking with a physician through a secure video link. It is another customized offering that responds to consumer needs.— Matthew Turack president, CAA Insurance
The other shift is the fact that consumers are always connected and expect their insurance providers to be the same, he says. “We are now focusing more than ever on how our clients interact with us. While we continue to manage our core business, we are exploring a ‘test and learn’ approach to new products – releasing them to clients and inviting their feedback, making improvements as requested.”
This more experimental approach led to creation of a suite of digital products called Duuo by The Co-operators, he says. “We developed the first digital on-demand policy in Canada for short-term rental housing, an activity typically not covered by regular homeowner’s insurance. Users can pop in and out of the coverage – turning it on before their guests arrive and having it automatically turn off when they leave.”
The Co-operators responded to client requests with another novel product: on demand Rent My Stuff insurance for people renting out their equipment. “We’re encouraging our customers to continue to tell us how we can refine more of our products and client experiences to align with their lives,” says Mr. Primdahl.
Produced by Randall Anthony Communications. The Globe’s Editorial Department was not involved in its creation.