Data-driven quoting is an emerging trend in Canada, and insurers know integrating analytics into their business is vital to staying competitive. “If you are the one insurer who doesn’t and everyone else is – all of your customers can get cherry picked to a better value proposition by another carrier,” says Steve LaValle, principal of Financial Services, Advisory Services at Ernst & Young. “You’ll be left with the unprofitable ones who are getting extraordinary value, relative to the price they’re paying.”
In addition to providing clients with a la carte data-based pricing models, carriers are, in many cases, also looking to close the communication gap with clients and strengthening their direct channel approaches. “Part of the problem in the past is that there’s not a lot of interaction between the insurers and client… The pay-as-you-go approach speaks to not having to buy coverage that I don’t need – so if I’m not a big consumer, I can buy less,” LaValle says. “Now the problem is it’s going to mess up the risk pools pretty severely, so we need this detailed information so we can get new insights into the risks and make sure we are pricing accordingly and billing accordingly.”
So where does a push toward data-directed business leave brokers? Ernst & Young’s 2016 Sensor Data Study titled Disrupt or Be Disrupted
, includes some ominous words for the broker channel: “Risk pools can be determined using direct streams of detailed and granular data, meaning some broker and agent activity will be no longer needed.”
However, Heather Masterson, Chief Operating Officer of Travelers Canada, says the evolution of insurance data can provide great opportunity and value to brokers. While speaking at the Insurance Nexus Insurance Analytics
Conference in Toronto, she said analytics can help brokers hone their business models. “There’s been a lot of marginal growth with brokers today that can be made more effective with data and analytics, and will in effect attract better brokers in the marketplace,” she said, adding that increased customer data can go a long way in improving closing ratios.
“Data can give advisors more direction on where they can focus, as well as provide additional sales info, which can help them be more effective.”