Canadian Underwriter

How directs may gain the edge when drivers purchase a car

October 13, 2020   by Adam Malik

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Insurers need to form stronger bonds with various ancillary organizations involved in a car purchase, so that insurance isn’t the last thing on a consumer’s mind at the end of the deal, says an industry consultant.

But in seeking out such partnerships, direct insurers may have a distinct competitive advantage over insurance companies that distribute through the broker channel, David Kerr, partner in the industry solutions practice at Deloitte Canada, told Canadian Underwriter.

For drivers, the car-buying process involves many layers: Researching the car, visiting the dealership, buying the car, and getting the financing approved. Buying insurance is usually the last consideration in the process,

Kerr said he would like to see insurers insert themselves into the end-to-end, car-buying experience before the client reaches the final purchase stage. That means being connected to both the car dealers and car-makers when consumers are doing their research on the vehicle make and model, the pricing, etc. “Partnerships with other players adjacent to the insurance industry are important,” he said.

For example, insurers could team up with online marketplaces that sell vehicles. Or they could partner with organizations that provide information about buying and selling vehicles. Or they could team up with the banks that provide the financing. All of these partnerships could help raise the profile of insurers, Kerr told Canadian Underwriter.

“That means becoming much more social media-aware [and] more search engine aware, as well,” Kerr said. It also means being more aware of other industry “partners out there that you could play with and provide value?”

Direct insurers are better-equipped to do this than insurers distributing through the broker channel, Kerr said.

“I think that for the majority of insurers, this [partnership model] would be a rather radical change,” Kerr said. “It depends upon your distribution method, of course. For those using independent brokers as their primary distribution partner, it becomes a little problematic. You’re relying on the brokers to do what I’m talking about, and that may or may not happen,” Kerr said. “For the direct insurers, they are certainly thinking of these things and [about] a broader set of relationships. They are certainly more social media- aware.”

For companies with broker partners, brokers are typically the first point of contact for the customer. Contact with the insurer then follows the initial contact with the broker. And therein lies the issue, according to Kerr. “I think the challenge is going to be: For those [insurers] that are not direct, how do they get more connected to their customers, where the customer relationship is more primarily owned by the broker?”

Kerr cited Deloitte research in support of his company’s “strong belief” that the overall insurance value chain is becoming more connected.

“When you think about the process of buying a home, and owning a home and maintaining it, or researching a car, buying a car, maintaining it and so on, many stakeholders are involved with that, and many businesses are connected to those processes,” he said. “The insurance company is often the last to be involved. But if you were better connected with the various steps along the way, you might be able to add more value, or you might be able to be supporting a client in a more pro-active fashion.”


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