Economical Insurance will use the lessons learned from the launch of its direct provider to help strengthen brokers’ businesses, according to Michael Shostak, senior vice president and chief marketing officer at Economical, who spoke at the CIP Society’s annual symposium in Toronto on Thursday.
The development of Sonnet Insurance resulted in improved technology, analytics capabilities and pricing capabilities in addition to new customer research, said Shostak.
“Sonnet was just a starting point [of a multi-step journey]. The next phase of that journey was applying that platform, the [lessons from that platform] and capabilities into our broker business, which is underway now and that is as big if not bigger of an initiative than Sonnet,” he explained.
Shostak was one member of a panel that discussed the importance of insurance businesses and professionals differentiating themselves in a more competitive landscape. He used the opportunity to provide some insight into how Economical balanced its relationship with its broker partners when the company was developing the country’s first home and auto digital quote-to-bind insurance provider, which launched in May 2016.
The development of Sonnet was initially a confidential process that few Economical employees knew about. As the news spread through the company, some employees were nervous about brokers’ reactions to the news of the direct provider, according to Shostak.
But the plan was not to use Sonnet as a way to change direction or abandon traditional distribution, said Shostak, but to begin a multi-step journey that would see the company trying to apply the new skills and tools developed for Sonnet to the broker side of the business.
A part of that is sharing information that the company has gathered from serving clients directly. Brokers can learn from the research on Sonnet’s clients and their behaviour in buying insurance products because brokers are selling those same products, Shostak said.
The decision to “disrupt” the industry and implement a direct provider was one way to ensure that Economical could continue to grow its business, explained Shostak, who noted that the company’s research indicated that 40%-50% of insurance was being sold directly.
However, the disruption did not revolve around the idea of implementing improved technology. The most important element of disrupting an industry or business is the implementation of services or products that satisfy clients’ unmet needs, according to Shostak.
People think insurance is complicated and don’t feel they have the right protection in place so Economical’s goal was to simplify the process of buying insurance and increase transparency, he said.
That led to the decision to implement a shorter questionnaire for the purchase of property insurance and the elimination of service fees on Sonnet.
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