News

Industry must work together to combat declining broker market share: Panel

Posted on Oct 27, 2011

Technology is key, say insurers at the annual IBAO convention.

 Insurers debated various technology solutions that could help combat the declining broker market share during a CEO panel at the 91^st Annual Insurance Brokers Association of Ontario (IBAO) Convention in Toronto.

One of the issues discussed was creating standardized tools versus proprietary tools to ease broker workflows so their time could be spent growing business. Panelists agreed that while they wanted to support a standardized tool, there are challenges, including that many industry players aren’t prepared to adopt standardization.

Previous efforts by the industry to adopt standardized approaches have been “miserable failures,” said George Cooke, CEO of The Dominion.

“I think it’s key to make workflows more efficient, but I don’t think it will be a standardized tool that all companies will use precisely the same,” agreed Economical CEO Karen Gavan.

Gavan’s appearance on the panel was one of her first major public appearances in the industry since replacing former Economical CEO Katherine Mabe, who stepped down for personal reasons in June only a few months after taking on the role.

Alister Campbell, president and CEO of Zurich Canada pointed out that in the same way his fellow panelists were divided in their choice of iPad, Blackberry Playbook, or pen and paper to make their notes during the discussion, so too were insurers, brokers and consumers different in their technological preferences.

“The constant aspiration to get to a single system is like physicists trying to get to a unified theory,” he said. “It’s likely to happen someday, but it’s unlikely to happen in our lifetime.”

Meanwhile, moderator Evan Solomon from the CBC stated consumers are using technology to purchase insurance and due to this, some brokers fear this would create a wall between broker-client interactions. Solomon asked if insurers were actively coaching consumers to use technology to shop for insurance.

Gavan said she didn’t agree that anyone was coaching consumers to shop online, but it was the reality because consumers themselves were making that choice.

“Consumers are looking for that immediate response and they don’t believe they’re going to wait between 8:30 and 4:30 to get some answers,” she said. “There has to be a new service model developed to service the consumer and that’s the consumer that’s driving the change, not the companies.”

Panelists agreed that all industry players must use technology to attract and retain consumers.

“The reality is that for certain products mobile apps work,” added Campbell. “If we weren’t building them, a competitor would.”

In his introductory remarks, IBAO chairman Bryan Yetman stated brokers in Ontario have lost 6% market share in the last five years. Additionally, Ontario brokers controlled 73% of the market in 1980. Today that number has declined to 45% and the majority of lost business has gone to the directs and banks, neither of which had a presence just 30 years ago.

Maurice Tulloch, president and CEO of Aviva Canada said additional solutions for brokers to combat the directs included going beyond the 9-to-5 workday, and touching customers on a regular basis, not just at renewal time.

M&A Activity

Soloman asked panelists if there would be more mergers and acquisitions (M&A) in the future, to which panelists stated yes. The Canadian market is perceived as highly fragmented so there is an investor push to invest, explained Intact president Jean-Francois Blais.

“I believe that Canada should have very strong carriers to fight with the internationals when they want to come to Canada and buy our flagship companies. Intact put itself in a position to compete with potential buyers,” said Blais, alluding to the recent Intact-AXA deal.

Blais’s appearance on the panel was his first major appearance in his new role as president of Intact Insurance. He participated on the same panel last year as CEO of AXA, which was acquired by Intact in a $2.6 billion deal on May 31.

Fraud

Pricing has been a constant concern for brokers—one reason they may be losing business to the direct channel, stated Solomon. Panelist said they all aim to offer competitive prices.

Campbell added consumers are always willing to pay a price for value. In this case, that value for consumers is the broker, who should be offering clients unbeatable service, he said.

One of the factors that affects price is fraud, stated panelists. Fraudulent insurance claims drive up costs and affect everyone in the industry—insurers, brokers and consumers.

Cooke stated that what drives organized crime rings is the income stream, and the way to combat fraud is to reduce that income stream.

“Make it less attractive so they commit the fraud someplace else,” he said. “We should look at the various products we sell, the way in which we sell, the way in which we deal with disputes, so that the opportunity for this income stream is reduced.”

Cooke added that some consumers get drawn into fraud innocently and may not know they are a victim of a staged accident, so brokers should educate their clients.

 

Suzanne Sharma on October 21, 2011

http://www.citopbroker.com/news/industry-must-work-together-to-combat-declining-broker-market-share-panel-2854