Pedestrians walk past an Aviva logo outside the company's head office in the city of London, Britain, March 5, 2009.Stephen Hird/Reuters
Insurer Aviva Canada Inc. is clashing with brokers that sell its policies as industry tensions rise over heightened competition and changing consumer demands.
The country's second-largest property and casualty insurer is being called out by the Insurance Brokers Association of Ontario (IBAO) for its increasingly visible push to sell insurance directly to consumers, as well as through traditional brokers, under the same name brand – an approach its peers have avoided.
The conflict comes at a moment when the property and casualty insurance industry is racing to revamp polices, sales tactics and underwriting methods to keep up with more digital-focused customers, heightened regulations and more frequent and severe weather disasters. From gearing up for driverless cars, to investing in big data systems that can change how companies view risk, insurers are jostling to position themselves to profit from these changes in the marketplace.
Amid these pressures, Aviva has been increasing its focus on technology and has boosted its ability to sell insurance directly to consumers through the acquisition of RBC General Insurance Co. last year. It built on that with a partnership to sell policies directly alongside the Toronto Maple Leafs and Toronto Raptors in Ontario. That deal sparked the spat between Aviva and the IBAO, which is a not-for-profit group that represents 12,000 brokers.
"Insurance products these days are getting more complicated as opposed to more straightforward, and there's a lot of choice, and there's a lot of complexity in what is being offered," said Colin Simpson, CEO of the IBAO.
Customers can buy insurance through a licensed broker, or directly from an insurance company by phone, app or online. Typically, these direct-to-consumer sales channels have been given their own name and brand by the parent company. The country's largest property and casualty insurer, Intact Financial Corp., will spit out a quote in three minutes online through its Belairdirect-branded business. And Economical Mutual Insurance Co. made waves last year when it created an online sales platform called Sonnet.
Aviva has always ignored this unspoken industry rule. And that frustrates some brokers, who feel they share in the strength of insurance brands they've helped build up and sell. By using the same name to sell directly, Aviva will "leverage that brand against us," Mr. Simpson said. He added that the IBAO has been trying to convince Aviva that it ought to create a separate brand for its direct-to-consumer offering for about a year.
Now, the IBAO has cut Aviva from its sponsorship program that promotes insurers' brands at conferences and events "for the foreseeable future."
Aviva called the move "surprising and disappointing," and said that it had originally received favourable feedback when it informed IBAO of its plans to partner with Maple Leaf Sports and Entertainment Inc., which owns the hockey and basketball teams.
Jason Storah, Aviva's executive vice-president of broker distribution, said in a statement that the company is still committed to its brokers, which account for the majority of its sales. He also said that Aviva is having "discussions with many brokers about how customers want to buy insurance and we are actively supporting our brokers with a range of innovative solutions to help them meet the evolving needs of their customers."
As consumers buy more products online and through their smartphones, brokers have had to work harder to show how they add value. And insurance companies have had to tread carefully around the network that has historically been their gateway to sales.
When Sonnet launched, for example, Economical's executives thought hard about how to differentiate the brand from the products that its brokers sell, because the company also has ambitions to grow that channel of its business.
When Economical's broker force first heard about Sonnet "it was a little bit of a – almost a stab in the back. An 'Et tu, Brute?' conversation," said Michael Shostak, chief marketing officer at both Sonnet and Economical, around the time the company launched. But Mr. Shostak said that once they showed off the end product, "it elevated their perception of Economical as a more innovative company than they've experienced, and secondly, it opened a dialogue for us to talk about consumer behaviours."
As insurance policies get more complex for both individuals and businesses, the IBAO says it has never been more important for customers to understand what they're buying.
"It is key that we get our message out so that consumers understand the value that we actually get from dealing with the brokers ... and ensure that they are getting the right products," Mr. Simpson of the IBAO said.