Product innovation is top of mind for brokers, as they look for ways to boost their market share among urban educated, professional and managerial clients.
“Consumers want to see innovation,” Insurance Brokers Association of Ontario (IBAO) CEO Randy Carroll said in a speech at the P&C Crystal Ball 2013, organized by CW Partners LLP and held in Toronto on January 24. “We [brokers] need a new product, we need innovation, and we need it now…
“We need insurers’ help, because we can’t do this on our own.”
Carroll wondered aloud whether the Canadian insurance industry’s most recent product innovation was Guaranteed Replacement Cost (GRC), which has been around since at least the early 1990s.
The GRC product calls for an insurance company to pay the full cost to repair or replace a home, even if the cost exceeds the insured amount shown on the insurance policy. Without this clause, the insurance company is not required to spend more than the appraised value of the “dwelling/building" at a policyholder’s current renewal.
Brokers particularly need new products to entice consumers in four key market segments, Carroll said. These include young drivers, new Canadians, urban educated Canadians, and the managerial and professional class.
Slow growth in the educated and professional categories is especially “disturbing” for brokers, Carroll said.
IBAO research shows that customers dealing with brokers today are predominantly classified within the “mature” category. Broker clients are typically older than 40 years old, and 30% of them are older than 60 — with 10,000 more people in North America turning 60 each day.
Clients who are working with brokers tend to be more educated than consumers who buy insurance outside the broker channel. Studies show they value a personal connection with their broker and their average household incomes are in excess of $75,000.
Overall, 62% of consumers bought their insurance through an insurance broker in 2012. Breaking this down further, brokers had a market share of 93-94% in commercial lines in 2012, down 2% from the previous year, and a market share of 51-52% in personal lines (home and auto).
