How a shared-risk approach to tech can keep mutual insurers competitive

Canada’s mutual insurance industry has been around for as long as the country itself and has innovated over that time.

Now it’s driving digital transformation to enable new capabilities, improve service and keep pace with market competition. These changes come in response to growing demand for digital services from policyholders, distribution partners and staff.

Key to this digital transformation is a move to web-enabled platforms that leverage application programming interfaces (APIs), which consolidate disparate systems and improve data sharing. This strengthening of connectivity across insurance distribution and service channels supports direction advocated by industry stakeholders, including the Centre for Study of Insurance Operations and the Insurance Brokers Association of Canada.

But digital transformation can be complex and expensive. Since mutuals can be smaller and more regionally focused than other carriers, the path to systems modernization can seem daunting. Fortunately, mutuals have a history of shared risk, and that approach can now extend to insurance technology.

By collaborating on requirements definition and leveraging collective purchasing power, mutuals can develop and deploy new software solutions that meet their collective and individual needs for lower costs than if they’d engaged with insurtech providers individually.

One example is HTM Insurance Company in Cobourg, Ont., which recently completed a modernization of its underwriting and claims operations following a joint development project with 26 fellow mutuals.

The efforts led to adoption of an advanced task-management engine for underwriting as well as optimized workflows for claims management. HTM is now looking to extend access to their systems to enable greater collaboration and transparency for all stakeholders in 2023.

The goal is to use APIs based on industry standards to make elements of their system accessible to staff, brokers and policyholders securely.

For policyholders, this consumer portal will provide immediate access to policy, claims and billing information. For brokers, it will enable data exchange between their broker management systems and HTM to access policy information. They’ll also be able to create transactions like quotes or upload new business.

Future-ready insurance carriers will be able to fully leverage nascent APIs to extend their systems across the insurance value chain. Examples include quoting solutions, lead generation tools, sophisticated rating services and low-touch claims processing capabilities.

Eliminating data silos also improves internal transparency and accountability. Managers can get a better overview of workflow at individual, team and departmental levels, while creation of ad-hoc reports and custom analytics can provide insights into the business.

Accessing this information lets companies proactively address service standards and shift resources in real time based on team capacity or sudden claims events.

The May 2023 derecho NatCat event in Ontario and Quebec gave our industry a practical example: an intuitive procedure allowed non-claims staff to establish and process subfiles so that claims staff could focus on working directly with policyholders.

Mutuals have continually innovated and promoted the ecosystem approach that leverages APIs to enable secure sharing of information across related parties. The approach can enhance a carrier’s ability to serve existing policyholders while positioning itself for the future.

Matthew Scott is President & CEO of Cognition+ Inc. This story is excerpted from one that appeared in the May print edition of Canadian Underwriter. Feature image by iStock.com/Alfieri