Evolving insurer-broker relations, Economical-style

The Canadian insurer is transforming its distribution strategy as it seeks to double its business

Economical Insurance is looking to double its business over the next five years and broker partners can expect to be a significant component of that plan, says Tom Reikman, the company’s chief distribution officer.

Economical announced in April that Reikman, a company veteran, would leave his post as chief operations officer to take on the newly created role of chief distribution officer. At the time, the company also announced a new chief transformation officer and head of commercial insurance.

The transforming leadership team is expected to grow further as the company is planning to fill two executive positions for its personal lines business and claims department.

If the company wants to double its level of business, “you need to be able to build your leadership team out so that you can execute on everything you want to do,” says Reikman.

Economical, which saw gross written premiums of $2.08 billion in 2016, plans to grow its business through Sonnet, its direct insurance provider, and possible acquisitions. It is also betting on its ability to increase the number of brokers that place business with the company – hence Reikman’s new role.

Evolving broker relations

As brokers confront a changing consumer landscape, Economical is striving to work with a broker population that is also changing. For instance, some independent brokers are forming “clusters,” which allows the brokerages to share resources and streamline costs without having to sell their businesses.

“We need to realign the way we do business with those different subsets of brokers as opposed to a ‘broker is a broker is a broker,’” says Reikman. “Not that we have done it that way before but this is becoming even more critical in terms of what is your value proposition to those different types of brokers?”

One aspect of Economical’s evolving value proposition to brokers is its partnership with Guidewire, which is leading to the implementation of a new policy administration system for the company as one way to help brokers improve efficiency within their businesses.

“The brokers spend a lot of time between multiple carriers going back and forth on documentation, data entry and all. We need to simplify that significantly,” says Reikman.

Economical has also been upfront with brokers regarding its intention to share any lessons learned from the rollout of Sonnet. The insurer has been collecting data regarding its experiences in marketing and selling products to different demographic groups.

Which consumers use brokers?

But the company already has some information that seems to be guiding its efforts in this renewed broker strategy. Economical commissioned an analysis of the insurance consumer market approximately two years ago, which found that 21% of the surveyed consumers don’t see the value in going to a broker while 47% say their broker is their go-to insurance provider or they are unlikely to use the internet to purchase insurance.

The remaining two consumer segments are looking to make a quick purchase without sacrificing price (14%) or are unsure of whether they would go to a broker (17%).

This latter group is looking for the best value proposition whether that is a broker or a digital alternative, says Reikman.

One of Reikman’s responsibilities under his new role will be to develop tools and services that will assist brokers in appealing to the consumer base that is looking for that better option.

“How do we make sure that the customer experience within the broker channel is constantly being improved?” he says. “It’s around just constantly evolving to make sure that you’re presenting the top value to consumers [and] the brokers because the brokers choose where to put their business.”

Just as Economical understands the need to evolve its relations with brokers, brokers themselves must evolve the way they interact with customers – and that could lead to an integrated model in which consumers receive recommendations for products from a broker but go through the acquisition process online in a matter of minutes, suggests Reikman.

Brokers’ abilities to explain and recommend the right products will provide them with an opportunity to grow their share of that market, he says.

 

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.