Economical Insurance expecting “significant growth” in broker channel over the next five years: Gavan at IBAO Convention

Economical Insurance is expecting “significant growth” in its broker channel over the next five years, possibly 25% bigger than where it is today, outgoing president and CEO Karen Gavan said on Thursday during the 96^th annual Insurance Brokers Association of Ontario Convention.

“Our growth strategy is multi-faceted: both organic growth and growth through mergers and acquisitions. In terms of organic growth, we are expecting significant growth from our broker channel, both in personal lines and in commercial lines,” Gavan said during the CEO Panel portion of the convention, held at the Sheraton Centre in Toronto. “We are doing it through improving our penetration with our existing partners [and] supporting our broker partners through financing.”

Gavan, who will be retiring from Economical on Oct. 31, added that the company has an active national personal lines broker committee that is providing input as it continues its growth through investment in technology. “It is supported by a significant investment in data and analytics to support the automated underwriting, so that you could… immediately get those quotes done and be able to bind your clients’ policy quickly and efficiently,” she said.

Gavan also discussed Economical’s May launch of Sonnet, the company’s online direct channel. “To launch a new company with a differentiated brand, we were very, very particular about developing a brand that was completely unrelated to the Economical brand, which our brokers distributed for us, so there would never be any confusion in the consumer’s mind,” Gavan explained.

The company’s research also showed that Canadian consumers wouldn’t buy from a company that they hadn’t heard of. “That launch of the new company requires a lot of awareness training, like a more extensive long-term advertising. That awareness will continue to build over time,” Gavan said.

Sonnet was designed to “target a segment of the consumers who are really comfortable making all their financial transactions online,” Gavan pointed out. “They don’t want to talk to anyone, including whether it’s a call centre or a broker’s office. They want to be self-empowered and they want to be able to cancel whenever they want to, they want to be able to make changes whenever they want, that’s what our research showed.”

And “the early results are that we are getting that exact target group on the Sonnet platform,” she said, adding that “it’s not for everyone and that’s what our research showed and that’s why I don’t think it competes with the broker channel. We’ve shared that research with our broker partners – the behavioural segmentation of the consumer groups.” As well, Sonnet is built on a completely new technology, which involves “completely different data sources than we currently use in the broker channel.”

In addition to the launch of Sonnet, Economical also announced the acquisition of Canada’s largest pet insurer, Petsecure, in May. “It’s a small acquisition,” Gavan said, noting that the pet insurance market in Canada is “very immature,” with only 1% penetration whereas other countries in the world have upwards of 25% penetration. “As a mutual company, we can do those smaller scale acquisitions at this point in time to broaden our product range,” she said.

Economical is currently in the process of demutualizing, a process that Gavan estimates “won’t be complete for another couple of years.” As well as demutualizing, Economical has “evamped our whole business development, our relationship management that we have with our inside staff,” Gavan reported.

Despite the acquisition and launch of Sonnet, “we need to keep our foot on the gas pedal because there’s still so much investment we need to do as an organization and be there and really transform the industry and how we do business with our partners,” Gavan concluded.

More coverage of the IBAO Convention

Insurers who fail to “adapt to what millennials are looking for” will let go of “majority” of customers: Intact president

Brokers are ‘not competition to each other,’ IBAO keynote speaker says