After a lot of initial hype in Canada about insurance customers preferring to purchase their insurance policies online in the future, the pendulum seems to be turning back in favour of more traditional points of contact such as the phone and face-to-face interaction, brokers say.
“We offered a product for about two years online,” said Sheroo Hyder of Link Insurance, an Alberta brokerage that mainly offers personal lines products. “We were one of the very select group of [brokerages] that had taken this technology from an insurance company to put on our website.”
The technology allowed customers to purchase their auto, home, condo or tenant’s policies online. They could complete the transaction by printing off the pink card in their home.
“That never took off at all in our brokerage,” Hyder said. “After two years, I think we might have sold 12 policies…. Today, after that experiment of online purchasing from our site, quite frankly we took it off of our website.”
Hyder said he was initially very excited about the opportunity presented by new online technology. He said it seemed to be a way for smaller brokerages to compete with products offered online by giant direct writers such as TD Insurance and RBC Insurance.
“But after awhile, I realized that’s not why I’ve been in business for 30 years,” Hyder said. “It’s not why I am a second-generation person in our family business with 12 locations in Calgary and two in Edmonton. That doesn’t happen with this technology on my website.
“It happens with people face-to-face, speaking about the things that they are passionate about, asking the right questions, and really taking the time to listen to what the customer wants, to what the customer says is important to them. And then find the product that matches that.”
This insight into the needs of brokers’ clients may at first appear to be counter-intuitive.
The Canadian Council of Insurance Regulators (CCIR), for example, has recently published a position paper on how online insurance sales need to be regulated in the future.
The CCIR published an issues paper in 2012 indicating that “more than three quarters of Canadians aged 16 years or more, i.e. 21.7 million people, used the Internet for personal ends during the year 2009. Of those, 39% acquired a good or service by placing an order online. During that same year, the 95-million online orders carried out represented a value of approximately $15 billion. These figures are significantly higher than those recorded in 2007 (a 35% increase in orders and a 15% increase in the value of such orders).”
But while consumers may be using the Internet to research the insurance products they wish to buy, they are not necessarily using the Internet to purchase the products, brokers say.
“Consumers do research online, but when they want to buy, they want to phone and speak with somebody,” said Eric Michalko, manager of sponsorships, digital marketing and public relations at Western Financial Group. “It may not be face-to-face, but they want to speak with somebody because they feel like, ‘I’m having a conversation with you, I can tell you things about my insurance policy, my car or my home that I can’t communicate online.’
“The one thing that we are noticing, too, is that clients are a lot more educated when they come in. It’s clear when they approach us that they have their research on hand. The main question that they always want to know is, ‘What am I not covered for?’”
Brokers say the question may reflect a hard-luck story following the purchase of online insurance products – purchases in which they did not receive appropriate advice about the product.
“I think a lot of [consumer education] comes from people who have already experienced claims in
.jpg)
other offices where they had insurance, and they did not have a satisfactory outcome,” said Hyder. “And now they are very forthright in their approach to us, saying ‘Would this be covered by the insurance company that you are insuring me with now?’ They are learning from experience.”
Michalko adds that consumers are also looking for more customization of their personal lines products.
“Consumers are becoming a bit more savvy in terms of trying to get out of being boxed in with one, ‘universal’ policy,” he said. “They are trying to achieve a policy that best defines what suits them.
“You and I may both have a home, and we might live next door to each other. But maybe my home has certain features or certain elements that I really want to make sure I get protected. So I customize to make sure I don’t have a generic home policy, but a home policy that protects everything that I have in my home.”
There will always be price shoppers online, brokers say. “But that’s not actually what you are buying,” said Hyder. “You are not buying a rate. You are buying protection.”
And, as brokers have observed in the past, the online insurance experience doesn’t respond well to product customization.
"As long as there are some complexities to the automobile product that allows the insurance community to add different kinds of coverages and different types of endorsements to the policy, then it becomes a little more difficult [to sell insurance online]," Harold Baker, once the CEO of the Insurance Brokers Association of Alberta, said back in 2007. “The Internet is good for: 'I want the blue-tone, extra-large shirt.' The product of automobile insurance is just not an extra-large blue tone.”
