Canadian life insurance brokers see insurers branching out to younger customers directly in the online and social media space, but they don’t feel this presents much of a threat to the advisory role of the independent life insurance agent.
“The broker channel is still an extremely important part of the insurance distribution network,” said Doug McPhie of Ernst & Young, which recently released a 2013 overview of the Canadian life insurance industry. “You won’t see any of the big companies walking away from that.”
Even so, Ernst & Young’s report notes that the independent broker distribution channel is changing in Canada.
“Today’s consumers in generations X and Y have different product needs and buying preferences,” the report says. “They prefer to conduct research online, are much more receptive to advice from their social networks than from live sale pitches and are more likely to buy online.
“Insurers need to reflect these differences in their value proposition to these younger consumers, especially in relation to their wide embrace of the internet, social networks, and virtual interactions and communications.”
McPhie, the author of the Ernst & Young report, said the life insurance agent has generally been serving an older generation of consumers, because the life insurance sales force itself is aging. (continued)#pb#
“It’s difficult to have an insurance salesperson in their mid-50s sell to someone who’s in their mid-20s,” he said. “People tend to buy more from their peers. Part of the problem is that the agencies need to refresh their talent pool, bringing in younger people.”
Adam Mitchell of Mitchell and Whale Insurance Brokers sees the potential for a widening gap between those who use a broker for more complex assets and those who seek to research and buy a life insurance product online.
“You may have a larger amount of a general public either buying directly through social media or e-insurance or other things, just like H&R Block has taken off,” said Mitchell. “But then you are going to have professionals and a certain demographic that can afford – and chooses – to keep a lawyer, or an accountant or an insurance broker.”
Carl Eppstadt of term/mart Insurance Agency Ltd. believes the complexity of some life insurance products means brokers are unlikely to be threatened by relatively simple products such as term life insurance and whole life insurance being sold online to a younger generation.
Eppstadt said an important role still exists for life insurance brokers to ask clients tough questions about their needs, particularly around estate planning.
“Seventy-five per cent of people don’t have a will,” he said. “People are still reluctant to deal with their own mortality. “They’re not going to flip on the computer all of a sudden and say, ‘I’m going to go ahead and buy an insurance policy.’
“Someone has to back the hearse up to the door, they will have a whiff of the flowers, and then they are going to deal with their own mortality. I think that’s still going to be up to the agents. They will be the ones to ask the tough questions.”
Also, McPhie added, life insurance agents bring to the table a better understanding of tax planning, investments and generational issues. “They really do bring a well-rounded perspective,” he said. “So they really need to be a well-trusted business advisor.”
