How online policy administration could put brokers at risk

When clients want to make policy changes online, brokers have a vested interest in being in the loop, suggests a consultant who advises insurance companies.

More customers these days are expecting their insurance providers to give them the same kind of online experience they get from other industries, said Chris Cornell, KPMG Canada’s national sector leader for insurance, in an interview.

If a client is moving to a different address, the cost of the policy might increase as a result. If the broker is not aware the client is moving, the client might not find out, from the carrier, that the premium has gone up until after the change of address has taken effect, said Cornell.

“Then the customer is probably going to reach out to the broker and find out why that happened and the broker might not necessarily be aware. If the broker is not aware, that’s not providing the broker with the ability to provide good service to the customer,” said Cornell.

This kind of scenario is a concern for brokers in Manitoba, where the government-run auto insurer is looking at the possibility of providing some services online. Whether this is a direct-to-consumer model or one where the broker is an intermediary has yet to be determined, a Manitoba Public Insurance (MPI) spokesperson told Canadian Underwriter recently.

“We have also had customers tell us they have no intention of doing online service,” MPI spokesperson Brian Smiley said. “They feel very comfortable with their brokers, they enjoy the human interaction so many of them will not even use the online services but there is also a growing segment that would like that option.”

Manitoba motorists must buy basic Autopac insurance from MPI.

Smiley provides an example of how the current system could be improved. If a client wants to change their deductible at 9:00 at night, that client is out of luck because the Autopac broker’s office is closed and the deductible cannot be changed by the client online, suggests Smiley.

Brokers in Manitoba are in favour of letting clients make policy changes online but the brokers should be involved, said Grant Wainikka, CEO of the Insurance Brokers Association of Manitoba.

But brokers are also concerned the direct model has the potential to cause “material job losses” and failure of small businesses in the province, said Wainikka.

“It is difficult for us to identify a stakeholder group that benefits from a government direct model,” added Wainikka, suggesting a direct model could cost the taxpayers more money.

It’s this issue that will bring MPI and IBAM before an arbitrator. Colleen Mayer, then the minister of crown services, ordered MPI this past July to engage in a conciliation process with IBAM over customer transactions. The discussions will take place in private and during that time MPI will not be allowed to bring in any new online services without the consent of IBAM.

“Manitobans expect and must be able to access an online distribution and payment channel for their automotive insurance needs,” Mayer wrote in her directive in July. Mayer is no longer the minister because she lost her seat in the September provincial election.

“If I look at this globally, there has been a move with customers wanting to deal directly with insurers especially in the P&C space, using an online channel and there are certainly benefits to that,” Cornell said in an interview, commenting in general and not on MPI specifically.

In terms of how they interact with their insurance providers, there can be differences among customers depending on their age group, added Cornell.

“For Generation Z and millennials, if they are purchasing insurance, the likelihood they will want to purchase that online and transact online for all their interactions is much greater than someone who is maybe a little bit older.”