Insurers are facing up to the effects of climate change and the accelerating risk of cyber fraud, while trying to build trust and value for customers. The 500-strong innovation team at Canadian P&C leader Intact has developed practical solutions while also delivering savings. In this interview for RBC’s Innovators and Ideas series, CFO Louis Marcotte explains how.
From climate change to autonomous cars, the insurance industry is facing challenges on multiple fronts. Intact Financial Corporation is innovating to stay ahead of those developments.
Intact is Canada’s largest property and casualty insurance firm, with 30,000 employees and annual revenues of around CAD $23bn. It declares itself a purpose-driven company, with “a firm belief that insurance is about people, not things”.
Leveraging tech power solves key industry challenges
Intact has launched a multi-pronged response to the damage and risk caused by climate change. It has expanded its water protection offering to customers, for example, and deployed machine learning models to adapt its pricing and risk collection.
Its climate response also extends to home restoration. Investment in repairing homes and businesses damaged by weather is paying off. “Our personal property business has delivered ten points of margin on average over the last ten years,” says CFO Louis Marcotte.
Tech has been leveraged in other areas too. Intact has built Canada’s largest telematics program, enabling it to track its clients’ driving patterns and gather a clearer picture of risk.
The company is also responding to consumers’ hunger for convenience, value, and trust – “areas where insurance has generally been weak”, as Marcotte points out. Examples include development of Canada’s top-rated insurance apps, and the establishment of service centers for Intact’s automobile business, where customers get complete service in one location.
"Our personal property business has delivered ten points of margin annually"
Louis Marcotte, CFO, Intact
Innovation lab improves user experience while cutting costs
Much of this work has been driven by the company’s innovation center, Impact Lab. The service now employs 500 people, who deploy machine learning, AI and user experience tools to develop the company’s capabilities. Marcotte believes the lab now delivers business savings worth over CAD $100m annually.
The lab has been able to improve fraud detection, by using computing power to identify behaviors common to fraudulent claims. Data aggregation and analysis has also delivered better models for segmentation and pricing.
In addition, Intact has personalized its telematics product. “One of our challenges is people getting the advantages of telematics system, but not actually activating it – now we’ve made it easier for them to do it,” Marcotte explains.
Further consolidation ahead for Canadian insurers
Intact has been a leader in P&C acquisition, adding over 19 companies over 35 years. The company expects to see further consolidation in the market, driven by factors such as performance, capital allocation, technology deficits and regulatory issues.
“We think 10 to 15 points of market share will change hands in Canada, with some activity in the next three to five years,” says Marcotte.
However, he has advice for companies eyeing acquisition, pointing out that Intact has only moved where both strategic and financial returns are attainable.
“It’s easy to fall in love with your projects, and push the numbers to make it work. Acquisitions are exhilarating. It’s a great feeling, but the reality is you haven’t achieved anything if the share price doesn’t move in the right direction.”
"We think 10 to 15 points of market share will change hands in Canada"
Louis Marcotte, CFO, Intact
Harness tech and reshape workforce for future-proofing
Looking ahead, Marcotte foresees a shrinkage in the risk pool of automobile insurance, as EV and autonomous car adoption makes driving safer. The industry will also need to do further work on climate and cyber insurance.
More widely, he foresees continuing challenges in the sheer pace of change, and the need for businesses to keep reinventing themselves. Intact’s focus on its societal impact will become more critical: “It’s not just running the business and creating value. That’s important, but there has to be good for society,” he says.
Profound knowledge of technology, and the ability to spot and act quickly on new developments, will put new demands on talent sourcing, Marcotte concludes – “reinventing the workforce, so that you are able to see new trends that are not visible today.”
"It’s not just running the business and creating value – there has to be good for society"
Louis Marcotte, CFO, Intact
Featured Guest:
Louis Marcotte
CFO, Intact