Canada’s digital insurance industry is on the cusp of creating more than 11,000 new jobs by 2021, but the outlook isn’t as rosy as it may appear.
“This year’s figures from the Canada Labour Code (CLC) suggest that digital insurance is a $4 billion business, but there’s no guarantee that we’ll be able to keep up with demand and grow our sector,” said Tim Burt, CEO of the Canadian Automated Insurers Association (CAIA).
“We’re not talking about a $1.2-billion business at all, it’s not that big a number.”
The CLC says that digital is the fastest-growing sector of Canada’s insurance industry.
Digital insurance is comprised of three main segments: digital health, digital pensions and digital life.
According to a report from the Canadian Centre for Policy Alternatives, the CLC’s digital health sector is expected to grow by $2.5 billion by 2021.
The digital pension sector is predicted to grow an additional $2 billion in the same period, while the digital life sector is projected to grow $2 million.
Digital life insurance is estimated to generate $1 billion in revenue for the industry in 2021.
“The industry is really well positioned to absorb these numbers,” Burt said.
“If we can continue to grow, we can provide a stable foundation for growth and a long-term foundation for jobs.”
Burt believes that the digital insurance sector has a bright future, but that he’s not so sure it will have the impact it needs to sustain itself.
“I do worry about the future,” he said.
“[We’re] not seeing the impact that we need to have on the economy and the economy needs to have the level of innovation that we’re seeing.”
The industry is facing a lot of challenges and uncertainty, but he said that the industry is able to cope.
“We can cope with the challenges we have because we have a lot to offer,” he added.
“There are a lot more opportunities in the world of digital than in the physical insurance industry.”
But some are not convinced that digital can provide the stability the industry needs.
“People are starting to question the reliability of the CLCs claims process, which is a critical component of the insurance industry,” said Rob Wilson, president and CEO of Canada Life Assurance.
“They’re questioning whether or not there’s any risk to the industry and the way it operates.”
A growing number of businesses are struggling to stay afloat and many are shutting down due to the economic climate.
According in the Canadian Insurance Association’s annual survey, the average Canadian household income fell by $3,000 in the first half of 2018.
Burt has no doubt that it’s the economy that is the biggest issue for the insurance sector right now.
“It’s a question of if the insurance economy can recover,” he noted.
“You’re not seeing that recovery coming from the insurance companies.”
The Canadian Automobile Association is also concerned about the health of the industry.
“What we’re doing right now is we’re losing our confidence in the insurance business, and we’re in the process of trying to make sure we’re prepared for that.”
A few other companies are also struggling to keep their businesses afloat.
“For the industry, the biggest challenge is that there’s a lot going on in the auto insurance market,” Wilson said.
The industry, according to Wilson, is not able to support a lot in the way of investments.
“A lot of people are just struggling to survive.
We’re losing people to the auto insurers,” he explained.
“So a lot is going on, and that’s a problem.”
For some companies, the industry has been struggling to find new business partners, including the insurance and medical industries.
The CAIA’s Wilson said that it would be “very hard to get more investment” if the industry were to collapse.
He said that this is why he is concerned about how the insurance market is being managed.
“Insurance is very competitive,” he told CBC News.
“To say that it will crash is a big understatement.”
However, there are still a number of promising opportunities for the digital sector.
“When you look at the market for digital insurance, the opportunity is huge.
It’s very, very competitive, it has a lot happening in the car insurance business,” Wilson explained.
According the CAIA, digital insurance represents about 40 per cent of the market.
“In the auto sector, it is much more than just the auto industry,” Wilson added.
“[Digital insurance] is the driver of the next wave of investment.”
However he is unsure whether this will lead to the next big wave of digital insurance businesses.
“Canadians don’t want to see that happen, and it’s just not going to happen,” Wilson warned.
“That’s why we’re looking at all the different options. It