Citing a national survey, the CEO of an insurtech start-up says that Canadians are paying too much for their home and auto insurance policies.
Scott Loong, the founder and CEO of Covera, also said that many consumers have policies that do not adequately protect them.
According to a survey that Covera commissioned, 80% of 1,800 Canadians from across the country said that they do not re-shop for their insurance year after year, allowing their current insurance to renew itself instead. This, Loong said, leads to many customers either paying too much for their insurance, having insufficient coverage, or both.
The survey also noted that most people purchase their home and auto insurance from brokers, who earn commissions of between 12% and 25%.
“A lesser-known fact is that every time these policies renew, brokers get paid their commission again – even if they haven’t done any additional work for their client,” Loong explained in a release. “It’s a fundamentally conflicted relationship. On one hand, brokers have a professional obligation to put their clients’ interests first, but on the other hand, there’s a strong economic incentive to do as little re-shopping as possible to find them the best deal.”
Covera is an online insurance broker that offers what it calls “an efficient and modern alternative to insurance shopping.” Utilizing a combination of algorithms and human brokers, the company helps clients re-shop for insurance each year, ensuring they get the best possible deal every time.
“With insurance premiums changing all of the time, it’s important our clients get the right coverage they need at the best possible price,” the CEO remarked. “We use technology to ensure they’re presented with smart alternatives at the right moment.”
The disruptive start-up has recently raised $1.5 million in venture capital and has been brokering auto insurance in Quebec since 2017.
What do you make of the CEO’s comments? As insurance brokers, what is your response to his words about commissions? Leave a comment below with your thoughts.
