Neil HuzingaAuthor and Consultant; Founder,

ArunBay Ltd.

Bill MorrisSenior Partner

Navicom

NEIL HUZINGA

FOUNDER, ARUN BAY, SMALL BUSINESS ADVISERSPREVIOUSLY CO-FOUNDER OF AVANTIA INSURANCE LTD

THE UK EXPERIENCE OF INSURANCE CONSUMERISATION

ICTC 2018 – WEDNESDAY, 28TH FEBRUARY 2018

MARKETS

THE INSURANCE MARKET

3 elements contributing to market trading conditions:

► Consumers

► Intermediaries

► Insurers

Markets are stable when equilibrium exists, but what if that equilibrium is disrupted?

UK CONTEXT

THE UK - BACK IN THE 80S

Consumers bought their auto and home insurance from 1 of 2 sources:

▪ Their bank/mortgage lender - for home insurance

▪ An intermediary - for auto and home insurance

► Direct Line became the first direct insurer in 1985

► Incumbent insurers and national brokers took note

► First steps to commercialisation and consumerisation of insurance

1985 2018

♦

Timeline

UK CONTEXT

A TRICKLE BECOMES A FLOW

► Bigger insurance brands drew a new audience

► Later in the 90s, insurance sales with mortgages were de-linked

► Consumers were forced to look at different sources

► Longer weekday and weekend opening hours appealed to busy people

► However by the early 2000s shopping around was hard work

1985 2018

♦ ♦

Late 90s

Timeline

UK CONTEXT

THE FLOODGATES OPEN - THE EARLY AGGREGATORS

► Single sources offering a handful of quote estimates appeared

► But by 2003, the first site to offer multiple quotes based on “full” risk

information had launched

► What started in 2003 with one aggregator comparing 6 offerings per

quote, within 3 years became 4 aggregators comparing 66, 76 or 86

► By 2007, having entered your details in just one site, you could click

through to any insurance provider and find all your information pre-

populated for your convenience

1985 2018

♦ ♦

Mid-00s1985 2018

♦ ♦

1985 2018

♦ ♦ ♦

Timeline

UK CONTEXT

THE ADDICTION THAT CHANGED THE MARKET

► By default, all aggregators list their quotes by price, cheapest first

► In turn, in order to protect market share, insurance providers started to cut

premiums

► Where price becomes the key driver, nothing else matters

► So coverage was sacrificed to drive lower premium

1985 2018

♦ ♦

Mid-00s1985 2018

♦ ♦

1985 2018

♦ ♦ ♦

Timeline

UK CONTEXT

AS WITH ANY ADDICTION, PLEASURE GIVES WAY TO PAIN

► Commissions plummeted

► Underwriting returns failed year-on-year

► Huge numbers of jobs and branches cut, market exits and consolidation

► Unintended consequences – the rise of fraud

1985 2018

♦ ♦

20101985 2018

♦ ♦

1985 2018

♦ ♦ ♦

Timeline

♦

YOUR MARKET/UK COMPARISONS

BRINGING IT BACK TO THE MARKET HERE

TRANSPARENCY

vs

OPACITY

CANADA/UK COMPARISONS

CONTEMPLATING THE FUTURE HERE

► Increased pursuit of efficiency, both internal and external

► Increased investment in technology

► Greater control over distribution

CANADA

WHAT DOES THE FUTURE HOLD?

► The market is changing, and will continue to at an ever greater pace

► There have never been more tools at your disposal to help you

► While “tech” and “insurtech” aren’t a passing phase, they also don’t need

to be the complex, expensive monsters that they are often perceived to be

… over to Doug …

TRANSPARENCY

vs

OPACITY

The Empowered Broker?

The New Normal

Customer expectations forever changed:

Mobile connectivity

“Instant” response to electronic inquiry

Real time, 24/7, self service capability

Proactive, personalized customer experience

Canadian Insurance Marketplace

Remains:• Heavily regulated

• Largely undifferentiated (product & service)

• Full of “misinformed” customers

• Full of “disengaged” customers

• Receptive to “new/relevant” customer value

• Cynical that product innovation will come

Where Does This Leave Brokers?Historic crossroads…

$...$...$...$...$...$...$

Value Added Insurance Offerings?

$…$...$...$...$...$...$or

Insurance as a Commodity Product?

PROACTIVE personalization

Brokers MUST establish competitive advantage

“Everyone has a role to play in delivering an exceptional Customer experience”

Cineplex

DIFFERENTIATION

Unique/DOMINANT branding

SUPERIOR customer experience

Journey INNOVATION

Broker Opportunity

Brokers MUST find process improvement:

Broker Challenge

Customer Engagement

Back Office Automation

Product Innovation

Smart Software Applications

Collaborative Partnerships

Embrace Change…Drive Disruption

Take Action Now!