Canadian insurers face a critical inflection point: continue chasing short-term targets or invest in long-term productivity transformation that could redefine the sector’s competitiveness.
According to Puneet Chattree (pictured), insurance industry lead at Accenture Canada, the industry’s persistent focus on cost control and quarterly returns is limiting its ability to capture much larger, sustainable gains driven by technology and artificial intelligence.
Chattree said the tension between short-term shareholder pressures and long-term strategic reinvention is one of the industry’s most pervasive constraints.
“It’s fair to say that the existing priorities that carriers have – delivering short-term shareholder value quarter by quarter – can sometimes challenge the long-term investment that’s needed,” he explained.
That mindset, he said, prevents insurers from making the foundational investments that could close Canada’s long-standing productivity gap.
“We need to step back and ask not just what long-term value we’re anchoring around,” he said, “but what investments we need to make now, and what access to capital we require to support that.”
Chattree emphasized that a long-term strategy doesn’t mean waiting years for results. Many productivity benefits, he noted, can be captured almost immediately.
“In many cases, 20 to 30 percent of the total productivity value can be realized within a year – through process optimization, smarter decision-making, and improving the way we do our work.”
Claims and contact centres, for instance, remain fertile ground for near-term improvements. “There’s a lot of within-year opportunity in those areas,” Chattree said. “You can still have short-term gain, but it has to be anchored to a long-term strategy.”
Canada’s traditionally conservative business culture is another factor reinforcing short-term thinking, Chattree observed. “Because insurance generally in Canada is more risk averse – and Canada overall is more risk averse – we double down on things that we believe will give us immediate results,” he said.
That cautious approach, while understandable, often sidelines projects that could build a durable competitive advantage. “We focus on what seems safe – cost reduction, incremental change – instead of the broader transformation that creates sustainable value,” he said.
This risk aversion also plays out in how leaders interpret emerging models like AI-native insurance, especially in personal lines. “It’s a hard mindset to get around – that a big portion of personal lines business could eventually be driven through an AI model,” he said. “That doesn’t mean there are no humans. In fact, we believe the human element will remain essential.”
One of the most telling disconnects, according to Chattree, lies in how executives and employees view AI’s impact on their jobs. “When we spoke to insurance executives, more than half said roles will change because of AI – around 53%,” he said. “But only 17% of employees believed that.”
That gap, he said, breeds anxiety and slows adoption. It creates fear that roles will disappear, he said.
“And that’s not the case. What we’ll see is roles evolving – merging skills, combining technical capability with industry expertise.”
He pointed to emerging hybrid roles – data scientists working within claims or actuaries leveraging AI-driven analytics – as examples of how the workforce will evolve.
“That interlock between data science and traditional insurance functions will be powerful for the industry,” he said, “and crucial for attracting the next generation of talent.”
Chattree said AI-native personal lines remain several years away from mainstream adoption, but represent a major opportunity for insurers willing to take the long view. “It’s a long-term play,” he said. “But it’s going to be important for the sustainability and longevity of personal lines.”
He added that insurers’ hesitation is often tied to the scale of change required. “When you speak with executives, many struggle with the idea of completely rethinking their business model,” he said. “Instead, they double down on pricing sophistication or regionalized strategies. Those are good short-term plays – but the long-term still needs to be invested in now.”
Looking five years ahead, Chattree said the difference between success and failure will hinge on how decisively insurers act today.
“If we start tackling some of the challenges we’ve talked about, a few things will happen,” he said. “First, we’ll see more organic growth in both P&C and life and health. Productivity allows companies to reallocate their workforce to areas that drive growth.”
That shift, he said, would also be visible in stronger combined operating ratios. “If the industry can capture even part of the seven to ten percent productivity gain that’s possible, that will show up in improved ratios,” he said. “You’ll see more competitiveness in Canada, more carriers staying in the market, and less consolidation.”
Chattree also anticipates a reinvention of the claims process – away from transactional handling and toward advice-driven service. “Humans will have more time to focus on prevention and resiliency,” he said. And customers will benefit from greater transparency and accessibility of information, which builds trust, he added.
Over time, these shifts could also generate net new roles within the workforce. “You’ll see the combination of what it means to be a data scientist and an actuary, or a data scientist in claims,” he said.
If the sector fails to act, Chattree warned, the consequences could be severe. “If we don’t do this right, we’ll start seeing the opposite effects,” he said. “Rising combined operating ratios, escalating expenses, and strained profitability.”
That could lead to exits from certain regions or market segments, further widening Canada’s coverage gaps. “We’re already seeing it,” he said. “When price freezes occur at the top without managing expenses at the bottom, margins erode, and some carriers simply can’t stay competitive.”
The result, he said, would likely be greater consolidation, particularly among mid-market and mutual carriers – and increased competition from global entrants. “If we don’t close the productivity gap, we’ll lose competitiveness,” he said. “Capital will become scarcer, and the fight for both regulatory and economic capital will intensify.”
