Building it so they will come

Brokers have been exhorting themselves to engage the cyber world for some time, and now the idea of an online brokerage is starting to turn into a virtual reality.

Having watched their direct channel competitors launch websites allowing customers to obtain quotes and insurance at their convenience, brokers have been pondering ways to offer the same online services in a way that the broker’s advisory role remains an important part of the process.

The answer is evolving in the form of “online brokerages.” In a way, the term “online brokerage” is a misnomer, in the sense that the service is offered by an actual, physical brokerage and staffed by real, licensed brokers. But the term applies to at least three different types of electronic insurance offerings:

• The consumer starts the insurance transaction online — by manually typing in information onto a brokerage website, for example — and then physically visits a brokerage to finalize the transaction.

• The consumer starts the transaction online and then finishes the transaction with the help of the brokerage’s telephone call centre or online chat service.

• The consumer starts and finishes the entire process online, from A to Z.

So far, the third method mentioned above — that seamless, 100% online offering — has been elusive for brokers, but that seems poised to change. Steven White, president of Henry White Insurance Ltd. in New Brunswick, says that his brokerage is planning the official launch of an online brokerage sometime during the fall of 2012. The website is gotoinsure.ca.

“I think we’re the only one in the country that’s doing this, where you can have your cake and eat it, too,” White says. “You can purchase your insurance online, go through the whole process from start to finish — the quote, the binding, the printing off of your print cards and making a payment.”

Consumers start the process by inputting their information on the brokerage’s website. They will be asked to submit their postal code, claims history, insurance history, the make and history of the vehicle in question, and any additional information required to get an accurate premium price.

Once the insurer’s rates come up (White’s brokerage works with five major carriers), the consumer will be asked to select a premium payment option (monthly, full pay, etc.).

At any point during the online transaction process, the consumer can go to the physical brokerage for help, call a toll-free telephone number or open an online chat dialogue box with a licensed broker who will be able to answer any questions in real time.

Depending on the insurance carrier, there may be a three-day, five-day or seven-day period for the brokerage to review and verify the information the consumer submitted online. This is to avoid fraud. “So, for example, you couldn’t have an accident now, come online and then buy the product to make sure you have insurance,” White says. “Checks and balances are in place.”

Once the online application is submitted for binding, staff at the brokerage will pull up the applicant’s abstract, driving history, claims history, etc. to verify the information submitted online. If the information is accurate, the policy will be issued.

In the instance of a discrepancy, the brokerage will contact the applicant, make him or her aware of the discrepancy, and offer the amended premium price. At that point, it will be up to the consumer to choose whether or not he or she will proceed.

The website contains a number of disclaimers, making information clear to consumers about coverages, and privacy binding privileges and authority.

J. Gerard Fortin et Associés Inc. in Montreal has been offering similar online insurance services for the past two years. Its president, Bruno Fortin, is careful about using the term “online binding” since this may be misinterpreted to mean a purely automated process, when, in fact, it is not. He notes that at some point during the online transaction process, one of his brokerage staff members will review and bind the web-based submissions.

How to Start an Online Brokerage

At White’s brokerage, a staff member in each of the brokerage’s 18 offices across New Brunswick is licensed for business specifically associated with gotoinsure.ca. Each of these brokers is trained to handle questions about all five of the brokerage’s insurers, even though some of the offices do not offer all five of the brokerage’s markets in their specific locations. “We have customer service reps in all of our offices that are licensed for gotoinsure.ca, so there aren’t any issues with regard to licensing and being onside with the regulators,” White says.

“As well, they have the training for the insurers that are on the online site if a client does call. Not all of our offices deal with the same companies, but the online site has five companies, so all of our staff members are trained for those five companies. We have staff in those brokerages that are designated to be gotoinsure.ca CSRs, in case someone wants to call or come in.”

Fortin says the operations at his brokerage did not change much when the online service was first offered. But a few months ago, the brokerage hired someone to work only on the website. “You have to have someone who is very involved on a day-to-day basis doing it,” he says. Thus far, Fortin’s brokerage has just one broker licensed to do the online service. The Quebec insurance regulator has performed an audit and given the online brokerage its blessing.

Building and maintaining an online brokerage may not be for small or thrifty brokerages. Fortin estimates that development costs for his online brokerage to be more than $100,000. “The broker [developing an online brokerage] must have a lot of money, because the development of the website is the tip of the iceberg,” he says. “There is also all of the publicity, time and resources you have to use to get this thing going.”

Publicizing the online brokerage is crucial: It isn’t always the case, as in the movie Field of Dreams, where “if you build it, he will come.”

“The biggest thing, I think, is the advertising part of it,” says White says. “The costs when you get into the advertising [include] the Google ad words, the analytics and the search engine optimization. This is far advanced of what we ever did in-house.”

White’s brokerage hired a marketing firm in the Maritimes “to help us with our graphics, our whole tagline, our pitch, our storyboard. And that cost of some money going forward.”

And so how does a broker rustle up this kind of money? For his part, Fortin is looking for investing partners — which might include other brokers, insurance companies or IT organizations with a stake in the development of a unique online service.

White says it has been somewhat easier to publicize in New Brunswick, because the total market of about 800,000 people in the province is smaller than in Toronto, Ontario, for example. But the brokerage does have expansion plans in the works, and as it acquires more offices, it will need to think about the costs associated with bringing on new gotoinsure.ca online agents.

Ultimately, both brokers say, consumers will benefit from offering online brokerages to the consumer. “We realize there’s a certain demographic out there that want to do stuff themselves — they want to do self-serve,” White says. “And we determined it would be really cool if we could come up with online, virtual brokerage, but still give consumer a choice to deal face to face. That’s how we came up with this concept.”