Are Canadians loyal to the broker channel?

The February 17 edition of Thompson’s World Insurance News reported findings from a poll of 6,135 consumers of life and P&C insurance from 11 countries. They concluded that Canadian consumers were the most loyal group to their current insurance provider and they had the lowest likeliness to switch providers in the next 12 months. Following the poll, a prominent broker was quoted as saying that he was “heartened by the fact that Canadians recognize the value of having qualified people deal with their insurance.”

While his comments are true to some extent, it’s dangerous to read too much into these findings.

JP Getty once said that, “In times of rapid change, experience could be your worst enemy.” As valuable as history and experience can be, even more valuable is the ability to embrace and evolve with changing trends.

In a report by McKinsey called, “Agents of the future: the evolution of property and casualty insurance distribution,” they claim that, “The internet has dramatically transformed consumer behavior and shifted their interaction with insurance providers, as well as the expectations of quality.”

Consider this: the Canadian consumer has yet to experience the massive amount of advertising that will drive them to buy quick and simple insurance on-line (e.g.: carriers who aim to work directly with customers spend upwards of a billion dollars in advertising to give the perceived sense of relationship with the consumer.)  Keep in mind that Geico is one of the most recognized insurance brands in Canada, yet Geico isn’t sold here. Even in an article released today by the CIP Society, they found that easy website navigation is a top draw for young insurance shoppers; this is a phenomenon that’s been happening in the UK and elsewhere for some time.

Keep in mind that 71% of consumers are using the internet to research insurance before making a purchase and they’re not only researching online, they’re requesting quotes. Further, J.D. Power identified five main ways people interact with the insurance industry:

(1) No interaction

(2) Interaction with agent only

(3) Interaction with agent who uses emerging technology

(4) Interaction with an agent who uses traditional technology

(5) Interaction with a non-agent only

When they analyzed the customer satisfaction level of the five, agents who used emerging technology was the group with the highest satisfaction rating. Surprised?

Now, because of the extreme popularity of this method of buying insurance in other parts of the world, I suspect that we’ll see Canadian consumers follow the trend before too long. When trends are ignored, you run the risk of losing ground and for brokerages that fail to identify these changes in consumer behaviour, do so at their own peril.

Solely trusting previous capability and experience servicing clients over the past years is not going to be enough. Which reminds me of a quote by Lee Iacocca (known for engineering the Ford Mustang and Ford Pinto cars) that, “the consumer does not know what they want yet.”

In terms of qualified people- the broker channel should not be too quick to feel a false sense of security.

The biggest shortcoming for most brokerages right now is the talent shortage. The war for talent is on which means successful brokerages must become adept at human resource skills, recruiting, selection, training, coaching and so forth. Rogers isn’t immune to this either. All across the country brokerages struggle with the shortage of skilled staff. And not all brokerages will be able to make that transition. Indeed the number of brokerages that sell to insurers or conglomerates each year is largely a testament to their inability to perpetuate the firm internally.

In a firsthand exchange, a broker from a smaller center claimed that they were forced to use unlicensed staff because they simply couldn’t find the necessary licensed staff. What will make brokerages as successful as the poll would suggest is adopting new trends and technology early and ensure that the most qualified and best talent are acquired to service clients.

But as trends in the UK and elsewhere have shown us, loyalty will be much less a factor in the future. Clients will move much more easily to the brokerage that does the best job publicizing their value proposition and to whoever will provide the best value proposition. The future will be very different than the present. Polls of current behavior are not much use in predicting what that future will be.

So instead of asking, “Are Canadians loyal to the broker channel?” we should really be asking, “Will Canadians remain loyal to the broker channel?”