Generating leads and acquiring new business is no simple task for brokers. Start-up insurtech companies have ramped up competition worldwide and incumbent insurers are trialing direct-to-consumer models to snatch business.
But there may be an answer to this business conundrum from an unlikely source… insurance comparison sites.
LowestRates.ca is a Toronto-based fintech company founded in 2012. The company started with $15,000 and an idea which has now “snowballed to success,” according to CEO Justin Thouin.
LowestRates.ca has made it on to
Canadian Business’ 2017 STARTUP 50 ranking of Canada’s top new growth companies for the second year running. It’s had a two-year revenue growth of 382% on the heels of 1,700% growth for the previous two years.
“Our success is testament to our consumers really appreciating the service that we’re offering and our insurance, bank and broker partners valuing the leads we’re providing and seeing from an insurance standpoint that there’s no more efficient way to acquire new business than through sites like ours,” Thouin told
Insurance Business.
“The biggest challenge for insurance brokers in Canada is how to drum up leads and acquire new business. More and more insurance companies are going direct to consumers and backing that approach with millions of dollars in advertising money per year. New customers, with no existing ties to a brokerage, are likely to gravitate towards this direct-to-consumer approach because that’s where the advertising is most significant.”
Insurance comparison sites are all the rage in Europe. In the UK, a huge 70% of insurance transactions start on price comparison websites, whereas in Canada less than 10% of the population has ever compared insurance quotes on a price comparison site.
The biggest obstacle to the insurance comparison industry in Canada is a lack of awareness, according to Thouin. Not enough consumers realise they can go online and compare insurance in the same way they can compare flights or hotel rates, and not enough brokers are making the most of it either, he said.
“We offer an opportunity for brokerages to acquire new business in a very efficient way,” said Thouin. “If a brokerage comes and works with LowestRates.ca, they will only be presented to the consumer and charged for a lead if their rate is the lowest. There’s a good chance the consumer is going to purchase insurance from a broker that gets a lead from us because that broker’s rates have been compared against multiple other insurance offerings and have come out on top.
“What the brokerage pays us per lead, it generates a cost-per-sale price that’s lower than any other advertising option they have in terms of growing new business. It is a win-win for consumers and brokers.”
When it comes to how successful the brokerage is in selling a consumer insurance, a lot of it comes down to customer services and interaction, according to Thouin. Price is important but a successful balance of rates and services will result in the best lead-to-sale ratio.
“We do see a variation in the lead-to-sale ratio between the different brokerages to whom we sell leads and that comes down to the services they provide and how they treat the consumer,” he said. “Value-added services are also an important component of consumer retention. Once a broker has acquired a consumer, they want that consumer to stay with them for insurance in subsequent years. If a customer is happy with the service they’re receiving, they will typically stay with the brokerage and purchase further products.”
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