June 10, 2019 by Adam Malik
With a hard market tightening its grip on the insurance industry, brokers will need to be on their toes.
They’ll be facing pushback from customers as premiums increase with little relief in sight as there are no signs of the hard market letting up, said Donna Ince, senior vice president of personal insurance at RSA.
“I do think [the hard market] will last longer,” she said as part of a panel at the Insurance Brokers Association of Ontario’s Young Brokers Conference in Niagara Falls recently, pointing specifically to challenges in auto and impacts of weather.
Auto challenges are commonplace among different jurisdictions in Canada. Alberta is facing what the Insurance Brokers Association of Alberta calls a crisis as payouts far exceed premiums collected with no ability to raise rates beyond a 5% cap. In Ontario, said panellist Paul Sweetnam, Economical Insurance’s Ontario region vice president, the industry continues to be plagued by fraud as one example.
“So if we don’t see that move, if we don’t see some improvement there, [a hard market] could continue for much longer,” Ince said.
The onus will fall on brokers to find ways to add value to their relationship with customers, such as by explaining new complex coverage options. In Ontario specifically, the provincial government is looking to add more choice to what consumers have – or not have – as part of their insurance coverage. Brokers will need to step up and explain the choices to their customers to ensure the right coverages are being bought.
“That’s a place where brokers have a great role to play,” Ince said.
Going back to the issue of fraud, Sweetnam referenced a study that showed $1.6 billion was paid out to fraudulent claims. “That means about $250 of every auto policy is going towards paying for that,” he said. “So when you think about that and going to your customers and talking about rate increases, this is certainly one of the areas that need improvement.”
Furthermore, customers are raising the bar when it comes to what they expect out of their insurance broker, said panellist Paul Stone, vice president of national distribution engagement for sales and distribution at Travelers Canada.
“The customer that you’re dealing with today is comparing you to Disney and Amazon. They’re not comparing you to the broker down the street. We have to provide that level of touch, that service. That’s how we need to think,” he explained. “We don’t need to think, ‘How is ABC Insurance down the street serving their client?’ What is the experience we want to give? And it’s not going to be one-size-fits-all.”
Brokers need to offer a multitude of options for their customers, which he dubbed the ‘call, click, come in’ strategy. Customers need to be able to pick up the phone and call their broker, visit them online or be able to come in for a visit. Stone used the example of his bank with its physical branches. Are they still necessary? Maybe, maybe not, but they’re there and it’s good to know they are in case he ever needs to see someone in person, get foreign currency or use a bank machine.
“That’s how we need to think: How do I capture as many different customers? That’s the future,” he said.