While 2019 is coming to a close, there’s no end in sight for the issue of rising auto insurance rates. Earlier this month, CTV News reported that auto insurance premiums in Alberta are expected to increase next year, with multiple insurers planning increases after a rate cap expired back in August. Several companies indeed confirmed that rate hikes of 12.1% and 15% were coming (Wawanesa Insurance and Aviva Canada respectively).
The rising costs of auto insurance put many brokers in a tough spot, and not just in Alberta. During the summer, Myles Kuharski, personal insurance sales manager and branch manager at Gillons Insurance Brokers in Thunder Bay, told Insurance Business that brokers were seeing “a really big displacement of what companies are taking, and the rules and underwriting guidelines for what they’ll take has changed the landscape as far as placing customers with proper companies for auto insurance.”
However, there are strategies that brokers can employ to continue adding value to this marketplace.
“Brokers need to find insurance companies that want to take business. Now, it may only be in certain cities or in certain provinces, or maybe only for certain demographic groups, but there are insurance companies that are open for business and that are well-priced for specific groups,” said Justin Thouin, co-founder and CEO of LowestRates.ca, adding that the rate comparison site can help in this regard.
“Brokers can tell us, ‘hey, we want these sorts of leads’ and we can find those sorts of leads for those brokers. We think that if a broker is looking to scale and looking to grow, we are their best choice. We are their lowest cost per acquisition, because if they’re going to try to compete in advertising, good luck spending with the banks or the insurance companies. If they’re going to try to compete in SEO, it is an extremely long path. You can go for years, even if you’re the best at SEO, without seeing any traction.”
While some might still be debating whether aggregators are friends or foes to the brokers, Thouin strongly believes that LowestRates.ca is the former because it offers them a way to scale their business in an economical fashion, if they keep an open mind.
“I think there are a lot of misconceptions,” said Thouin, “because we are not viewed favourably by certain insurance companies and certain brokers, for no other reason that we haven’t had a chance to really have a conversation and tell our story in terms of how we can help grow both of them.”
Considering that 46% of Canadians have made a purchase from their mobile devices and 87% made an online purchase last year – according to the 2019 Canada’s Internet Factbook released by the Canadian Internet Registration Authority – it’s also just a smart business move to meet customers where they’re already shopping.
“Canadians are going online and they’re comparing everything in their everyday lives. Insurance is no different,” said Thouin. “This is the reality and brokers can choose to get with the trend and get onboard, and benefit from this or I’d be very interested to hear what the alternatives are – how you grow business alternatively for the average broker – because I think it’s difficult.”
In light of this digital age, LowestRates.ca has big plans for the year ahead. First, the more insurance companies that can be made available on the platform, the better.
“It’s a win for consumers because the prices are going to be lower and it’s a win for our partners to whom we provide leads, because if there’s more competition for those leads, then when we generate a lead, and when a partner has been matched with the consumer, there’s a much higher percentage chance that the consumer is going to buy from that partner because the consumer is going to feel like, ‘I really did compare the whole market, I have no reason to go anywhere else, this is the best partner for me,’” explained Thouin. “In return, that will lower the cost per acquisition for the insurance company or the broker even further because the more leads that they can close that we send to them, the lower their cost per sale and the lower the cost per acquisition.”
Being able to compare the whole market is the big picture goal for the company, as is continuing to work with partners to get rates as accurate as possible, so that when a consumer visits the website and then speaks to a broker and/or insurance company, their rate stays the same.
“We also want to make it more convenient, so we’d like to have bind online technology as much as possible to work with brokerages and work with insurance companies so that when they’re matched with a partner, they can then purchase online without needing to speak with someone over the phone,” added Thouin. “What we find is the more it can stay online, the better the sale ratio is for the partners eventually, because people want to do everything online. They start online and they want to finish online.”