The entrance of Esurance and Google into the Canadian market has some industry figures concerned for independents.
This week’s news that Esurance will be expanding into the Alberta market follows closely on the heels of Google’s plans to begin selling auto insurance by the end of the first quarter. Both companies noted that gaps in the current market represent enticing possibilities for alternative distribution channels, leaving brokers to read between the lines: your services no longer suit today’s consumer.
“Canadians use the internet at a higher rate than any other country, yet quoting and buying insurance online is still in its infancy,” said Esurance President and CEO Gary Tolman. “We think there is a tremendous opportunity to introduce Canadian consumers to insurance for the modern world.”
Local insurance companies, at least, are worried about what new players like Esurance and Google might mean. A January survey of the country’s insurers conducted by Xchanging reveals that 42 per cent of the industry believes non-conventional insurance sources pose the biggest competitive threat in the market.
“The Canadian marketplace has a real focus on the agency model,” said Sean Allen, vice president of North American sales for Xchanging Insurance Services. “By adding another channel — an online channel — insurance companies are seeing the threat of commodity-type insurance marketing.”
Other insurers are intrigued by the possibilities that platforms like Google offer — particularly as more than two-thirds of current policyholders say they would consider purchasing insurance products from these organizations, according to a recent
Accenture report.
The interest is understandable, saidValen Analytics CEO Dax Craig, despite carriers’ wish to maintain good relationships with their brokers.
“Carriers value the broker channel, but I think they’re very curious about these new players and what they’ll mean to them,” said Craig, who works with both carriers and brokers develop technology solutions for the industry.
“I think the distribution system is going to chance significantly, along with the rest of the industry.”
That’s just the attitude brokers need to adopt if they plan to adapt to changing consumer preferences.
“If you’re an agent that’s small, I still think there’s a way for you to win. I really do,” said Craig. “Those who are adopting more technologically driven apparatuses to help them do business are going to be the ones most attractive to potential buyers.”
