Wawanesa brings U.S. learnings to Canadian brokers
October 21, 2018 by David Gambrill
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Brokers can learn a valuable lesson from Wawanesa’s $9.5-million investment in an online platform to provide direct-to-consumer quotes for rental insurance, the company’s president of Canadian P&C operations told brokers attending the 2018 IBAO Conference last week.
Don’t try replicating what the online direct channel is doing, advised Carol Jardine.
“Hold onto what you’ve got,” she told brokers attending the Thursday morning CEO panel in Niagara Falls. “You’ve got market share. Give customers the advice that they want. Give the customer outreach, give them the knowledge. Give them everything that is within your bailiwick. Don’t try replicating the aggregator…because that’s not what the people in your communities expect of you. Hold onto who you are. Just get better at what you do.”
Jardine’s advice came in response to a question from the moderator David Coletto, founding partner and CEO at Abacus Data. He asked Jardine if Wawanesa planned to bring its U.S. direct model into Canada.
“We have absolutely no plans to go direct in Canada,” Jardine replied. “I’ll be honest with this audience. I am hoping that by making this decision, that by doubling down on brokers in Canada and in Ontario, that you will grow with us. Brokers have been asking for a long time for a company to come out and say, ‘We are only going broker, we are only going to be one channel.’ We are here for you, we would like to grow with you.”
With that, Jardine said the company “learned some really tough lessons in our direct model in the United States.”
Wawanesa has had an operation in California since 1974. The U.S. operation was facing competition from direct online disruptors such as Lemonade and Metromile, which offer different forms of ‘pay-as-you-go’ insurance, including platforms for home, renters and auto lines. Wawanesa decided to enter the fray with an online product dubbed ‘Quote by Renters.’
“We spent $9.5 million to build a Quote by Renters platform,” Jardine said. “If I told you how many renters’ policies, at an average of $125 each, we had to sell to make up that $9.5 million, I will be dead and buried. It was the worst decision we ever made, but it was a learning experience.”
Brokers concerned about competing with such direct-to-consumer quoting platforms should remember that these platforms may in fact be serving only a small number of niche customers, some of those customers may be price sensitive, and the consumers may in fact wind up being unhappy with the final product, in the end.
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Wawanesa grossly overpaid for their portal. The lesson here is that large companies (and the large consulting house leeches) can’t be nimble or cost effective.
Brokers have to move forward with digital enablement. Our customers are looking for us to provide them with the basics that they are expected today in terms of online servicing. This isn’t eroding our role as Trusted Advisor – it’s simply making room for us to have interactions of value. It is well researched that authentic, value added interactions are how we will be judged as Trusted Advisors go forward. Making every little interaction with us manual and difficult is what erodes this. We brokers need to stay the course here on modernizing or Google will eat our lunch with their customer first approaches. Heck they are already coming in the back door with their Applied investment. It sure wasn’t the clunky bold software that they bought in for was it.
You need to develop a relationship with your clients. Direct to consumer is ill-conceived and I know first hand that such a system has a lackluster conversion rate. The client is focused only on the premium and very little else. If you have a feature that stands apart from the rest of the crowd you need a human being to represent and highlight it. Stakeholders need to compare the conversion rate on such systems vs human to human contact and calculate their annual losses. It’s not worth it.
It’s what you have made the client used to. Any change in the personal service and you will start to lose business. You might succeed if you have a robot made up in your exact likeness but avoid any programming that speaks like R2D2.
we can learn from Wawanesa but it doesn’t mean they are the Bellwether of comparison.
Mary K already said it but large insurance companies just don’t understand how to properly invest money in technology. I refuse to listen to a company that believes wawanesa is a good brand. If they had any sense they would rebrand immediately. They may lose a small amount of built up brand recognition in the short term but long term moving away from that godawful branding would benefit them.
I have been to the online site, just to check it out.
They are absolutely correct that the client is only concerned with premium. If you do not understand all the options they are providing (from basic fire) then you are hooped.
We need to protect the consumer from themselves.
In BC, you MUST be licenced, how then can an online system get away with it.
I am certain Wawanesa has run in to problems with claims. Although a consumer just wanted Fire cover for example, at the time of a Vandalism Loss, they will state they didn’t know what they purchased. It happens daily in a brokers office.
Other companies have gone the hybrid/broker route since this article was written, like CAA and Economical.
Also, $9 million for a rating website? This could have been done for less than n$100,000.