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CIP Society speakers discuss impact of direct writers


April 26, 2013   by Greg Meckbach, Associate Editor


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Brokers are losing market share to direct writers while customers are demanding more web and mobile services, but an executive with RSA predicts the decline of brokers’ market share will slow down.

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“We’re quite bullish on the broker channel,” said Shawn DeSantis, executive vice president of RSA Insurance. Brokers have 91% of the Canadian commercial market, he added, noting this creates opportunities to cross-sell personal insurance to existing customers.

DeSantis made his remarks during a presentation at the CIP Society Symposium 2013, held Thursday at the Toronto Region Board of Trade office by the Insurance Institute. His session, dubbed “The Direct Writing Landscape,” included executives from DAS Canada and Desjardins General Insurance Group.

Denis Dubois, Desjardins’ general manager for the Ontario, Atlantic and Western Regions, noted that across Canada, brokers’ share of the personal lines market, measured by direct premiums written, is 53%. Direct writers and agents have 34% and 13% market share respectively, he added.

But in Quebec, where Desjardins had 2% market share in 1987 before it went direct, Desjardins’ share of the market grew to 20% today.

Advantages for direct writers, Dubois suggested, include using computer and mobile technology to be more efficient. In order to provide web services, especially to wireless devices, he suggested, there is “significant investment that needs to be done” and this investment “does not happen overnight.”

Dubois referred to remarks made in a breakfast keynote session at the symposium by consultant Max Valiquette, managing director of intellectual property and content development at advertising firm Bensimon Byrne and a former host for TVOntario.

Valiquette, who talked mainly about behaviour trends of people under the age of 35, suggested there needs to be more apps for handheld computing devices and smart phones for the corporate environment.

“I think we’re moving to an era where we will have just one screen,” he said, alluding to the fact that many workers use laptop computers as well as tablets and smart phones.

He advised insurance firms to make sure their websites are useful regardless of the size of the screen of the device used by the people accessing their sites.

“You should not design a web site once each for every screen size,” he said.

At the direct writing session, DeSantis said people shopping for insurance want to shop online.

“We know they want a response quicker but that doesn’t mean they want direct,” he said, noting some customers have “distinct needs.”

For example, DeSantis said, a person with two cars, a home and a cottage will be looking to transfer risk for four of their most significant assets.

“That’s tough to do online and tough to do on the phone,” he

said. “You need someone to spend some time with you on that file.”

Both DeSantis and Alex Manning, manager of corporate partnerships at DAS Canada suggested that brokers’ share of the market has been dropping by one percentage point per year in Canada.

“We believe it will reach a point where it will decline at a much slower rate,” DeSantis said. “We see brokers changing quickly to adapt.”

Manning said the one point-per-year drop in brokers’ market share is “enough to alarm people” but has not been nearly as dramatic as it has been in Britain, where, he suggested banks have been selling home insurance to mortgage customers. Canadian banks are not allowed to sell insurance in their branches, and brokers have generally been opposed to financial institutions selling insurance at the point of granting credit.

Manning, who previously worked in Britain, suggested he recently asked a Canadian bank teller about insurance. The teller has “just recovered from the shock of having an Englishman asking her about insurance,” he quipped.


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