TRAVELERS Canada has made its first foray into broker ownership but it does not intend to acquire any outright.
Earlier this month the insurer made a majority investment in Toronto-based digital broker Zensurance to close the gap on the advantage its competitors have gained through technology-based market insights.
Zensurance provides online insurance solutions for small businesses.
“(The investment) is a wonderful opportunity to close that gap,” Travelers Canada president and CEO Heather Masterson said at the recent Insurance Brokers Association of Ontario’s convention in Niagara Falls, Ont.
“Right now we are looking to glean learning in Canada through the broker channel, through market research and tapping into U.K. colleagues. But in terms of having hands-on knowledge we are excited for this opportunity.”
She said the company views the investment as a move to enhance its insurance technology capabilities as opposed to a straight-out investment in the broker channel.
“When we take a look at the majority investment in Zensurance we look at that as an insurtech play,” Ms. Masterson said.
“We have ramped up our commitment to technology and innovation.”
She said Travelers has appointed a global chief innovation officer, operating its own innovation lab, and it has also partnered with California-based startup accelerator Plug and Play Tech Center.
“We have a lot going on in terms of innovation and see the investment in Zensurance as an extension of that, supporting and participating in insurtech,” Ms. Masterson said.
She said ultimately what Travelers wants to gain from the Zensurance investment is how to be more customer-focused, particularly because it has no direct operation in Canada from which it can directly see customer preferences.
While the insurer does not intend to buy Canadian brokerages outright, it is exploring ways to invest in them to help interested businesses grow.
Ms. Masterson said the company spent a lot of time ironing out a broker acquisition strategy.
“The conclusion we have reached is we don’t think we need to get involved in broker acquisitions, we don’t think we need to be in a position where we need to own a broker network,” she said.
“Because of that thoughtful analysis and place we have landed, we have decided we are going to earmark a specific fund of money dedicated toward broker financing for independent brokers that want to consolidate, grow and achieve scale in the Canadian market.”
She said Travelers has been talking to Canadian brokers about this strategy and brokerages south of the border are also interested in the investment opportunities.
“We have been having interesting conversations with brokers in Canada and U.S. brokers,” Ms. Masterson said. “(They are thinking of) coming into Canada and thinking about making investments here and we view all as opportunities.”
Travelers Canada is a subsidiary of Travelers Companies Inc., the second largest insurer in the U.S.
In 2013, Travelers Companies acquired The Dominion of Canada General Insurance and St. Paul Fire and Marine Insurance Co. and combined and rebranded them along with its existing Canadian operation as Travelers Canada.
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