The Canadian broker channel is at risk of losing ground to insurers targeting the direct channel, as consumer appetites and expectations change. The warning came from Insurance Brokers Association of Ontario (IBAO) president Doug Heaman, who said brokers need to adapt to a constantly evolving, and increasingly digital, marketplace.
The recent announcements from
Economical and
Aviva’s acquisition of RBC suggest that insurers are increasingly looking at the direct channel, perhaps to the detriment of broker networks. Moreover,
Insurance Business recently heard from the head of ecommerce at
AXA, that he
believes it’s only a matter of time before commercial insurance purchases move away from intermediaries and go direct.
Tough times indeed, and Heaman acknowledged there’s been broad concern throughout the broker community, but encourages brokers to see the opportunity these changes bring.
In a conference call to the IBAO membership, Heaman said that the market is fully immersed in an era of accessibility and insurers are acting strategically, not only on the current landscape, but on their predictions for what’s to come.
“This is the new reality. Change has happened, is happening and will continue to happen. Customers are asking for, and receiving 24-hour service with access how they choose. Insurers are feeling the pressure to show growth and return on investment, and the broker channel has been slow to respond to changing consumer demands,” he said.
It’s time to ask yourself what your role as a broker is, and how you’re going to compete in the evolving marketplace.”
Choice is a fundamental appeal for consumers, according to IBAO chairman Michael Brattman.
“There’s a very bright future for brokers,” Brattman said. “Insurance is a 54 billion dollar industry. 50% of consumers get their insurance through the broker channel. It’s a platform more appealing than single product offerings – we have the upper hand by offering choice. The
upcoming auto reforms provide brokers an opportunity to connect with their clients and educate them on changes to Optional Accident Benefits coverage."
All insurers, including those in competing distribution channels are looking for opportunities in the broker channel. As AXA’s own direct channel proponent warns: “[Do] not to use phrases like “cut out the middle man”. That will alienate where you get most of your business from.”
So the trend of more choice for consumers is perfectly aligned with the broker value proposition, according to Heaman. “It’s time to get really clear on what that is for your brokerage – whether it’s a niche, digital or exceptional service play. Brokers who approach their markets with a solid business plan will receive support,” he said.
