August 19, 2014 by Jeff Pearce
Novelty coffee mug in place: check. Obligatory poster with personal meaning yet still office-friendly: check. I had barely warmed up my Editor’s chair when one of the most gargantuan brands out there went fee-fi-fo stomping through our news feeds. And no, it wasn’t the Godzilla remake.
Wal-Mart has decided to offer price comparison shopping for auto insurance in the U.S. Given its reputation for laying waste to small town businesses, you wonder if there will soon be tumbleweeds blowing through brokerage offices south of the border. And what would happen if they made a play up here? It was as good a story as any to cut my teeth on to figure out the Canadian insurance landscape.
Which brings us to the education of an editor. I walked into the office of Randy Carroll, CEO of the Insurance Brokers Association of Ontario, who does not see the sky falling. He pointed out the retail giant is offering its service through an affinity program (it’s teamed up with AutoInsurance.com), and that’s nothing new under the sun. After all, Costco also has one.
“If compared with Wal-Mart, you take a look at how many people go through those, it’s competition in the marketplace. That’s all it is.”
Carroll says he’d “be foolish to say that there’s nothing to fear. It’s a larger competitor than what you’re used to, who has access to a fairly massive database. And it really depends on whether the customer wants to go through a direct model or whether they want to stay with an advice-based model and continue to deal with a broker.”
Rick Orr of Orr Insurance in Stratford, Ont. asks pointedly as well, “Do you really think discount retailing and professional financial advice go hand in hand?”
Orr says the Wal-Mart move in the U.S. is really indicative of an attack on the cost-focused client market pool than on the market of more advice-focused clients.
And surprise! Wal-Mart has already tested the waters up here. From late 2012 through to January 2014, the shopping giant piloted a home and auto insurance quote comparison service called Wal-Mart Compare. But Wal-Mart Canada’s PR manager, Rosalyn Carneiro, says the experiment “didn’t work” and was discontinued.
So, intrepid new editor—lesson learned, yes? (Hopefully… Maybe…) Not all is what it seems. But here’s hoping we’ve offered you something to mull over as well. It’s nice sometimes to be reminded that Goliath might trip over himself even before David has to pick up his sling.
Copyright 2014 Rogers Publishing Ltd. This article first appeared in the June 2014 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.