Economical Insurance activates multi-channel distribution with launch of direct channel

Economical Insurance’s new direct channel – part of an updated corporate strategy to position the company as among the top property and casualty insurers in the country – went live Monday morning.

Economical Insurance has activated multi-channel distribution with the launch of the direct business, Sonnet Insurance Company. The new digital platform will initially offer personal home insurance policies, including homeowner tenant, condo and landlord insurance, while personal auto is scheduled to follow in the second half of 2016.

“Clearly, we have big ambitions as Economical Insurance,” Karen Gavan, the company’s president and CEO, told Canadian Underwriter.

“We are going through demutualization. We aim to be one of the top p&c, independent Canadian companies,” Gavan (pictured below right) said last week. The launch “is the first major milestone in our commitment to bring our growth strategy to life,” she adds in a company statement Monday.

Related: Launch into direct-to-consumer market expected soon, demutualization packages being mailed: Economical Insurance

With $2.0 billion in premiums during 2015 and $5.3 billion in assets as at December 31, 2015, Economical Insurance conducts business under Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Family Insurance Solutions, and Economical Financial.

“Sonnet brings an innovative new insurance experience to a distinct and growing segment of Canadians who prefer to purchase insurance directly and online,” notes the company. Customers will be able to get a customized quote, purchase a policy and make updates to their accounts online, on any device.

By using data and modern technology, it takes answers to just a few questions for a customer to receive with a personalized quote in seconds. The platform brings multiple data inputs in real-time to produce the quote and insights allow pricing “each customer individually and appropriately, giving them the exact coverage they need for their risk portfolio,” Economical Insurance adds.

Insurance “policies have been re-written into plain language, with tips and guides throughout the process that explain insurance jargon and ensure a customer understands what they’re purchasing and why it matters,” the company reports.

By demystifying insurance and redesigning the customer experience, Economical Insurance suggests that customers will have more say in building their specific insurance programs and the insurer will enter a market to which it historically has not had access. “These are customers who aren’t considering our broker channel as they strive for self-sufficiency and take a DIY approach to their insurance policies,” notes a company backgrounder.

Over the insurer’s history, it has worked solely with the broker channel. When considering the personal lines market as a whole, about 50% is written through direct channel and about 50% through the broker channel, Gavan pointed out.

Figures indicate the balance is skewed even more to directs in Quebec “where we need to grow,” she told Canadian Underwriter. “To realize our overall aspirations, we need to have a strong presence from coast to coast. So we knew we needed to enter the direct consumer channel.”

Related: Economical Insurance to launch direct channel sometime in 2016

“This is direct insurance re-imagined, with a focus on the customer experience,” Chris Van Kooten (pictured right), senior vice president and chief underwriting officer for Economical Insurance, says in the statement. “The industry will be surprised by the depth of technology, data and analytics that has gone into creating this truly innovative experience,” Van Kooten suggests.

“Sonnet uses multiple data inputs to quote, including municipal data, geo-proximity such as how close a home may be to a river, and weather information,” he told Canadian Underwriter last week.

Before Economical Insurance moved forward with the offering, “we really conducted a significant amount of consumer research, behavioural segmentation studies, brand perception studies, customer satisfactions studies,” Michael Shostak, chief marketing officer, added late week.

The idea was “to be specifically tailored to that segment of the population that wants to buy direct, that is very comfortable with online transactions and financial services online,” Shostak (pictured left) said. “In those consumers minds’, best in class experience is not measured against the insurance category; it’s measured around the best digital brands, regardless of the category they’re in.”

Citing research from a number of different sources, Economical Insurance reports a several findings of interest:

• 71% of surveyed Canadian consumers would not purchase insurance from a company they have not heard of;
• 59% of polled insurance customers believe buying insurance is time-consuming and cumbersome;
• only one out of four surveyed customers are satisfied with their current insurer, although 70% say they intend to renew without considering alternate options; and
• 45% of polled consumers prefer the advice and services of a broker.

Overall, Economical Insurance notes, “most Canadians feel doubt and confusion around what their insurance coverage provides, and they often feel treated like a number by their insurance companies,” notes the backgrounder.

The goal was to provide a “truly digital experience” and, further, to provide “that simplicity that people expect today,” Gavan pointed out.

Economical Insurance reports that “the insights leveraged for the technology, analytics and consumer know-how on Sonnet” will be applied throughout the insurer’s family of brands in the immediate future.