The past few years have brought many new changes to one of the world’s most traditional industries. Some insurance start-ups are challenging the established order with enhanced distribution models that focus on digitalizing the insurance process.
The Insurance Brokers Association of Manitoba (IBAM) is slow to warm up to a recent plan formed by Manitoba Public Insurance (MPI) to move some of the province’s auto insurance sales online. According to MPI, the plan is simply a response to an increased consumer demand for “more online services” (Insurance Business Canada¹). The IBAM is concerned that this proposal will leave out insurance agents and brokers, threatening the jobs of over 2,600 people currently working for Manitoba’s brokers. (Insurance Business Canada¹).
In a new mandate letter to the MPI board, Colleen Mayer, the Minister of Crown Services, made it certain that “the government wants insurance brokers to serve a purpose in online insurance sales” (Insurance Business Canada²). The broker will continue to play an important role in ensuring Manitoban’s have access to professional advice that helps them understand their options and mitigate their risks. Mayer is confident that there will be a place for both MPI and the IBAM in the future of online insurance sales.
Manitoba is not the only province looking at online models. Cost overruns and other issues with the Insurance Corporation of British Columbia (ICBC) have led critics such as the Canadian Taxpayers Federation to call for a move to online sales in that province as well (Global News Calgary¹). BC Attorney General David Eby has noted that due to reduced commission rates paid to ICBC Autoplan license holders in that province that consumers actually save compared to provinces with a fully privatized model.
This commentary may be a bit ambitious considering that BC consumers pay the highest auto insurance rates in Canada (Canadian Underwriter), and despite that ICBC still projects to lose over a billion dollars for the current fiscal year (Global News Calgary²).
While news of online sales direct from provincially run insurers may be worrisome for the future of insurance agents, it also stresses the importance of developing a modernized delivery system for auto insurance. It then becomes a choice of the consumer; while some will continue to prefer face-to-face interaction with a broker, others may find an online service more convenient. Prudent brokers that can offer both options will likely find success in the future Canadian insurance marketplace.
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