January 12, 2021 by Adam Malik
Canadian customers may have been slower to adopt to digital options when it comes to insurance in the past but one insurer executive expects the tables to turn rather quickly, predicting half of its customers buying insurance online in the next few years.
The Canadian Council of Insurance Regulators issued a report close to the end of 2020 that showed just 12.2% of property and casualty insurers sold through the internet in 2019 — and only 1.3% of insurance policies were sold online.
While those figures don’t account for the digital transformation many insurers undertook in 2020 as a result of the COVID-19 pandemic, TD Insurance president and CEO Ray Chun expects more and more customers to soon satisfy their insurance needs online — half of all customers in the next five years, to be specific.
He referenced another survey by McKinsley that, though U.S.-based, showed 70% of consumers surveyed said that they would shop for, purchase and service their insurance needs digitally.
“The demand is there, that’s for sure,” Chun told Canadian Underwriter. “The insurance industry in Canada is still very early in the journey for digital adoption, digital capabilities.”
The U.S. has been on a digital journey for much longer than Canada, which is why you see higher usage and adoption rates there, Chun explained. “You’re seeing the Geicos, the Progressives significantly further ahead in the adoption of digital. In sales, binding end-to-end, the numbers that I’ve heard are somewhere [near] or close to 50%.
“Our aspiration over the next five years is that we move towards 50% of our policies being bound online. And then, certainly, the majority of our simple self-serve transactions would be done through digital self-serve capabilities.”
Can TD really move to get 50% of its insurance policies sold online in just five years? “That’s our goal, five years, but hopefully sooner, to be honest,” Chun answered, adding that the key is to create an experience that is frictionless and effortless for customers when they engage with your website.
“If that’s the journey we’re on, and once we deliver on that expectation, I think consumers are already ready to adopt,” he said.
He pointed to the uptake in clients using an app on their phone to take photos of damage and submit their claim digitally — usage went from 15% pre-pandemic to 85% post. “That happened within … a few months. People significantly shifted how they engage digitally with respect to a claim.”
This push to go digital doesn’t mean other important areas like having someone ready to chat over the phone is going to go the way of the dodo.
“Insurance is a complex industry and so I think there’s always going to be the human element,” Chun observed. “It’s the organizations, in my opinion, that are going to best blend the digital experience that consumers are gravitating towards, but with the human experience when they need it.”
Feature image by iStock.com/AndreyPopov
Selling insurance on-line is a very risky business. The number of clients trying to influence their premium with inaccurate declarations is already very high and it will take an astronomical level of artificial intelligence in order to detect such efforts. The live conversation interaction with an insurance agent or broker makes it easier to recognize hesitation or attempts to modify details in real time. An on-line service is unlikely to react to such efforts because it will most likely treat information batched for submission.
These systems may work for the simplest cases, but too many consumers are ignorant of the details and nuances of information requested and even honest clients may submit incorrect information.
This is clearly the comment of someone who has no idea what “digital” means. Not only can we much better verify a human online using the right set of tools, much better than a person lying to another person, we can also digitize the agent interaction. Your 1995 version of digital is the reason Canadian carriers and brokers are stuck in a different era. So many VPs and SVPs earning fat cat salaries for doing precious little.
Yours is clearly the comment of someone desperate to push a narrow minded agenda. It’s truly comical when I read your post. Here are some facts for you. People are busy or at least they perceive themselves to be. Insurance is a product you buy now not having a clue whether the product is effective or not until, possibly, years down the road. I’ve dealt with people plenty of career successful people and plenty of regular Joe working class. Do you know what’s common between them? 19/20 don’t have a clue about insurance. The more educated they are, the more “busy” they are having to manage 29378 details of their day and life. If a qualified person sitting in an office can take that burden off them. They’re practically begging for someone to do it. Really. You should hear the fear in people’s voices when, unfortunately, there is a risk I can’t do in my office and I tell them to look online. “Are you sure you can’t do it? Another headache? More work? Yeah, no thanks.” The reason you think computers so readily replace people is, simply, you’re one of the easy ones to replace. When you become someone people cry over when you leave, you’ve got it made. Be that person. Thank me later.
It is ironic insurers talk about the on line or direct sales but they never talk about their loss ratios with online or direct business. Also, I never hear a word about their retention. The best sales arm they have is the broker however the insurer never recognize what the broker does for bottom line. I see the crap that online carriers are selling to the public. It is a disgrace how under insured the consumer is with direct writer & online sales. The industry needs to quick the practice of selling on the cheap. We you save large sums of premium it is usually because of compromised overages. The industry in their greed for profits have forgotten about satisfying the needs of their client. Its time the industry got back to the basics and quite looking like banks.
Keep speaking the truth loud.
These comments about price and service remind me of the music industry. How the executives all said people don’t want to download crappy MP3s and ‘they want to buy a piece of the artist they can hold’. They alluded themselves into thinking they were essential to tell you about “the next hit.” The industry is now 99% online subscription, consumers recommend music to friends, and the DJ is dead.