How COVID-19 Transformed the Insurance Landscape in Canada

Aug 30, 2023

When talking about the changes caused by the pandemic, one can't ignore the ripple effect of Covid-19 symptoms. The very nature of these symptoms forced individuals to self-isolate and seek virtual healthcare options, indirectly pushing many industries, including insurance, to rethink their operation models.

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A NEW KIND OF WORKPLACE

When COVID-19 hit in early 2020, every business and every consumer changed the way they did business almost instantly. Early on, nobody had all the answers. However, business trends like management, hiring, digital adoption and data analytics all changed at an accelerated pace. Businesses learned quickly as they tried to adapt to the new world we were facing, sometimes failing and having to adjust on the fly. The way consumers interacted with businesses also changed rapidly.  How did the COVID-19 pandemic change the Insurance industry in Canada and abroad? Let’s take a look at what happened and take a small glimpse into the future.

WORK FROM HOME, HYBRID MODELS AND TWO-TIER OUTCOMES

On March 17, 2020, the Government of Ontario declared a state of emergency and our world changed forever. For most businesses and certainly every citizen, it meant going home immediately and figuring out what to do next.  What happened to the Insurance industry in Canada? Well, there is some data that shows smaller brokerages, especially in rural areas, were slowest to adapt and many stayed in office. Read more on how stay-at-home orders impacted Ontario brokers.

Medium to large-sized operations like call centres almost exclusively worked from home since they had the technology and resources to organize quickly and effectively.  As vaccines were rolled out and the public was reaching herd immunity, some offices went back to the office entirely while most opted for a hybrid model. This has also created a divide between those who prefer to be in the office and those who want nothing to do with the office. Not only is there a generational divide but a divide in social norms. It begs the question, will those who don’t want to work in an in-person collaborative environment miss out on opportunities? Will business leaders prefer to work with those who communicate effectively in person or will they adapt to more online employee interactions in the insurance sector? Simply put, will the people who want to stay home miss out on opportunities? Time will tell.

 

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A NEW WORKFORCE

As COVID-19 rapidly changed everything in our world there was a wave of accelerated retirement and consolidation across many industries, including insurance. Many Baby Boomers decided to get out entirely rather than adapt to a new business world. In an industry where about half of the workers are retiring from 2015 to 2025, COVID certainly accelerated this great exit. Learn more about the insurance workforce dynamics.

Consolidation followed as brokerage owners and senior Insurance people gave way to an ambitious younger cohort. The question is, how do you replace half of your industry seemingly overnight?  The answer is in attracting young talent, not only to your business but to the entire Insurance industry in general. Young University or College grads, Newcomers to Canada and people looking to start a second or third career have filled the gap along with specialists from other industries. This has created a talent crunch and intense competition for blue-chip prospects. Never have so many inexperienced Insurance professionals commanded so much leverage in hiring negotiations. 

Not only can new entrants demand a high salary, work from home, benefits, and educational opportunities but also an accelerated career path as replacements are desperately needed in management. Insurance companies and distributors are fighting tooth and nail for top talent and those who win will be best suited for the next 5-10 years and beyond.

 

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ACCELERATED DIGITIZATION

When did you first use Amazon? When did you first start ordering food at your home from an app? When did you start streaming music, movies or TV shows? While most people would have done at least one of these before, it is likely that you did some or all of these things during COVID. Statistics Canada backs up this assertion about changes in consumer behaviour during COVID-19.

Now that consumer expectations are forever changed the question is did businesses adapt? The answer is yes, some did. In an industry that is famously slow at innovating technology, the Insurance industry in Canada had no choice but to accelerate its digital roadmap. Not only did employees have to work from home using cloud technology, VoIP phones, etc. Insurers had to up their online game. If you’re not offering online options, paperless experiences and top-notch human interaction meshed in with the technology, then you’re missing out on today’s consumer. 

It is likely that the Insurance market in Canada did more in the last three years than it did in the last 20 when it comes to innovation and changing the client experience for the better. That’s a good thing! Also, not only are the clients demanding this but so are the much younger workforce. They know of nothing else than having 8 apps open on their desktop all at once, keying and integrating data at the speed of light while the customer enjoys a seamless experience, blissfully unaware of the magic happening at the other end of the screen.

LOWER CLAIM FREQUENCY LEADING TO REBATES

But how did COVID-19 affect insurance for consumers? Well, for one thing, fewer claims were happening. As people were home their cars were parked, and on the road much less. This reduced the claims frequency. Also being home there were less severe home insurance claims. As people were at home, they were able to mitigate things like fires, water claims or break-ins. They could simply address situations more quickly. All of this led to record profits for most Insurance companies over the first year or two of the pandemic. So much so that premium rebates were introduced. In 2020 and 2021 many consumers in Ontario received cheques in the mail from insurance companies. The numbers weren’t large but enough to pay for a round of groceries for the family.  

As people got back on the road the claims returned and along with inflation, claims costs were higher than ever. Learn more about the high claims costs in our detailed blog post. This is leading to insurance rate increases, especially for auto insurance, in the double digits. This is why it is always recommended to shop your renewal with a broker like Begin Insurance to see who has the best rates for you.

USAGE-BASED INSURANCE

With many workplaces, especially in white collar office jobs, remaining at home either full or part-time, there is a growing segment of the population that is using their car less. If you find yourself in this position you may ask yourself, 'Why am I paying the same as my neighbour who drives to work every day?'. That is an excellent question, why aren’t you paying less? Nowadays, especially since the onset of the COVID-19 pandemic, we all have approximately a gazillion apps on our phones that are tracking everything we do. Why not add one that actually saves you money? Ask your broker about Usage Based Insurance, UBI for short. It’s also called Telematics. This app will reward you with discounts of 10%-20% for NOT driving or for driving safely. Since the vast majority of these plans will not surcharge you for risky driving like speeding, you really have nothing to lose. In this new post-COVID world take advantage of the technology that will save you money. Learn more about Telematics in our detailed blog post.

THE NEXT 10 YEARS

Yes, the years from 2020 to 2023 changed our lives and the business world forever. Which trends will stay and which ones will fade? Will people work from home forever now?  Will commercial office buildings be a thing of the past? It is highly likely that most businesses will retain a physical office where people can socialize, collaborate and team build.  Will working from the office 100% of the time be mandatory at some point?  Likely not. Some folks are expecting that people will miss their colleagues, social interaction and different spaces in general. 

A return to work will be inevitable. There’s also the fact that there is a generation that only knows work from home and can’t imagine why anyone would want to engage in water cooler conversation. With the emergence of AI and Chat GPT is it very likely that technology will be even more intertwined with everything we do at work and that those who adapt will survive. At Begin Insurance we believe that consumers want the best price, and best insurance coverage, made simple and easily accessible through technology while having a top-notch interaction with a warm human at the other end. That is unlikely to change any time soon!

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