Pandemic could transform distribution

July 13, 2020 — AS PROVINCES begin to open up work places at various speeds, will insurance shopping return to business as usual? Or will a public grown accustomed to shopping by phone during the pandemic switch more to direct providers?

In fact, it may be a combination of the two. Customers might shop by computer but still finally sign with a broker.

As CEO of relatively new Vancouver-based MGA Stratford Underwriting Agency, Colin Brown planned to offer insurance through both channels — but events overtook him.

“Stratford’s plan was to sell through brokers but also online . . . but we were beaten by COVID,” Mr. Brown, the former CEO of Canadian Direct Insurance, told Thompson’s.

“The idea (now) is that we will offer our product online, but it’ll still be credited to a broker.”

He believes that the pandemic will fundamentally change shopping habits — and may finally break the Insurance Corp. of B.C.’s stranglehold on optional insurance in B.C.

“People have become so ingrained with ICBC, getting the quote from the broker. The private sector still has only around 10% of the optional.

“But this has been the big switch — what people are calling the new normal.

“Never in ICBC’s history have they had their Autoplan brokerages shuttered before.

“Luckily for them, they had brought their new (computer) system in a couple of years before . . . to authorize their Autoplan brokers to do stuff over the phone.

“(The pandemic-related measures) are definitely going to move people along that line — how far along remains to be seen.”

Mr. Brown believes that the pandemic will fundamentally change shopping habits.

“People will recognize that they were able to sit at home in their jammies, lift the phone and buy their (ICBC) Autoplan insurance, and that will lead to more of what I’ve been trying to do for 20 or 30 years.”

Once ICBC sells Autoplan over the phone, customers are bound to wonder why they can’t obtain optional insurance at the same time in the same way. And Mr. Brown plans to be there with Stratford, steering that business to the smaller broker.

As CEO of the Insurance Brokers Association of B.C., Chuck Byrne is a proud supporter of the broker network and is quick to point out that brokers never shut down during the pandemic.

“B.C. brokers have remained fully functional throughout the pandemic, as you may know, following the industry being identified as an essential service.

“IBABC, the Insurance Council of B.C. and ICBC worked together in mid-March 2020 to ensure brokers had the regulatory exemptions and permissions to serve the B.C. consumer in a ‘safe for all’ manner.”

Once the lockdown is over, Mr. Byrne is confident brokers will resume their role as the primary sellers of insurance in B.C.

“As the Restart B.C. phases evolve, B.C. brokers will once again evolve with any newly defined best practices needed to maintain safety for consumers and brokers.”

Daniel Mirkovic, president of Vancouver- based Square One Insurance Services, has dealt with personal lines customers exclusively by phone or internet since opening in 2011.

“Even now, year-over-year, we’re still seeing strong growth,” he said. “We’re a little bit shy of what we had projected, but not by that much.”

Mr. Mirkovic admits it’s difficult for a direct seller such as Square One to tell how many customers have switched to direct, especially when even clients of traditional brokers may visit several websites before deciding on a seller.

He said it is telling that more of his clientele is buying from their cell phones rather than from their computers.
“Now around half of our traffic and our sales come to us from people buying home insurance on their mobile phones.
It definitely skews a little bit younger, but we’ve seen that change . . . in that it’s becoming more mainstream.”

But Mr. Mirkovic doesn’t see any growth in business due to the pandemic.

While it may force people to go online instead of shopping in person, it has also brought with it a downturn in the economy, curtailing purchases of homes and cars — in other words, things to be insured.

However, when it’s time to renew house or condo insurance the sticker shock of rising prices is prompting people to shop around — by smartphone, increasingly often.

Mr. Mirkovic believes the remote habit is here to stay, even when the lockdown is over — for Square One offices as well as customers.

“It will be very interesting for us. In the past we had very few people working from home, and if they were it might’ve been a couple of days here and there. But with the new reality, some people have done very well working from home and quite enjoy it.

“As we transition back to the office our initial thought was that about half of our workforce would come in, so that we can ensure proper distancing. I think in our case, at least until there is a vaccine, we’ll probably keep half our workforce at home.”

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