March 2, 2019 by David Gambrill
Wawanesa Mutual Insurance Company made a bold move last year, forsaking the direct channel to sell exclusively through brokers. Carol Jardine, president of Wawanesa’s Canadian P&C operations, shares her assessment of how the strategy has worked so far.
cu | Why did Wawanesa decide to double down on the independent broker channel, to the exclusion of direct channels?
When we were at a crossroads regarding our Canadian distribution models, we researched customers‘ buying habits for insurance and learned that buyers are looking for advice and choice. Based on that research we decided to double down on brokers as they are best equipped to do both. Many Canadians in our chosen markets find insurance a complex asset protection purchase and need assistance in buying the right insurance product, with the best coverage, providing the best service, at the right price. Brokers do that. Brokers in Canada have also been asking a company to commit 100% to them, to be a true partner and not compete against brokers in their communities. So, when you combine those two facts with our hometown values and our roots as a Manitoba-based Canadian insurance company, you can understand why we have backed the broker channel and have doubled down on it.
cu | Have you seen any signs of the strategy working?
Yes. We are now a full national partner with the Insurance Brokers Association of Canada (IBAC) and honoured to be able to use their new logo across Canada. Brokers appreciate our confidence in their future. When we have asked brokers to help us grow, we have been able to appoint brokers in Ontario, a province in which we have not been as well represented as we are in Western Canada. Also, we have been approached by some very innovative, digital brokers who are comfortable working with us. The digital brokers know we are not going to compete with them direct to consumers online, so they can sell our products knowing they have a unique opportunity.
When applied in Quebec, the strategy has delivered the biggest impact. After nearly 90 years of direct distribution in the province, transferring our distribution rights to 11 brokerages demonstrated our belief in the broker distribution channel. Those 11 brokerages share our values; they are in communities servicing our customers’ needs where our customers live and work. Brokers in Quebec wanted to have a market that was not going to compete with them in their community and we are happy to meet that need.
cu | How would you describe market conditions right now?
Conditions are challenging for all stakeholders in insurance. It’s challenging for brokers, it’s challenging for insurance companies, it’s challenging for our policyholders and other people’s customers.
Brokers are telling us that they are seeing reduced underwriting capacity, rates increasing and some insurers making decisions that could negatively impact customers. We are hearing about all those concerns from brokers across the country.
cu | How can brokers maintain their retention levels through this challenging market cycle?
The best thing a broker can do when markets are challenging is to communicate to their customers proactively, and invest in meeting customer’s expectations in that regard. Our customer research says brokers are doing a great job on processing transactions. They have an opportunity to invest more resources in their relationships with the customers. The relationship is what is truly valued by the customers who use the broker channel, and it’s a broker’s competitive advantage in retaining their customers.
cu | How do brokers break the bad news about the tough
It is all about communication. Consumer research says that if customers are informed ahead of time about major product and price changes being delivered to them, they are more accepting of the change. Customers do not like surprises when they open their renewal documents. So, we are encouraging brokers to get ahead of the renewal cycle. Take the opportunity to have a conversation with customers and socialize them to market conditions. Make sure their coverage is right for them, prepare them for any potential adjustments in cost and if there may be an increase, help them find the right protection solution for them.
cu | Have you seen an evolution in how brokers and carriers use technology to exchange data between them?
In the past, insurance companies and brokers invested in the right technology for them. So, we saw brokers investing in strong broker management systems (BMS). More recently, you will have seen insurance companies replace their mainframe policy administration systems with new systems. At Wawanesa, for example, we spent $300 million to upgrade our sales and service platform and launch Guidewire. That allowed us to bring together the brokers’ investments in their broker management systems with the investment in our new sales and service, thereby helping brokers to find the right solution for them. That allowed brokers to do the “utopia” of insurance transactions, which is to quote and buy inside their BMS and integrate seamlessly with our sales and service platform.