After a seven-year hiatus, Aviva Canada returned to the stage of the Insurance Brokers Association of Ontario’s annual convention CEO Panel, where multiple insurers discussed—and poked light-hearted competitive jabs at one another about—their direct channels of business.
At the end of the panel, Aviva Canada’s chief distribution officer, Ben Isotta-Riches, addressed the current IBAO president Dario Battista, who was sitting in the front row, and jokingly said,” Dario, are we okay?”
As 800-plus brokers acknowledged the humour with some laughs in the crowd, Battista smiled and reassured him things were good, and that nothing he said was out of line.
“So, I guess we’re back [at next year’s IBAO Panel],” Isotta-Riches quipped. “I just don’t want another seven-year gap.”
The rift between IBAO and Aviva over the company’s direct channel started in 2017, when Aviva Canada announced it was offering “team-branded” home and auto insurance directly to fans of Toronto’s Raptors and Maple Leafs sports teams.
Aviva announced at the time that, in partnership with MLSE, Aviva Agency Services Inc. would offer and administer home and auto insurance online. That offering was to be underwritten by Aviva Canada subsidiary S&Y Insurance Company.
IBAO announced then it would be suspending its sponsorship partnership with Aviva Canada “for the foreseeable future.”
In a media release at the time, IBAO CEO Colin Simpson explained that “Aviva continues to leverage the Aviva brand for broker-distributed products and direct-to-consumer products, with an inconsistency around product availability and pricing — a strategy the IBAO believes promotes confusion for consumers.”
Simpson further said this confusion was “damaging to IBAO member businesses.”
“Consumer awareness of the Aviva brand has been built in partnership with the broker channel over many years,” he said. But the association “cannot continue to promote Aviva as a supporter of broker distribution in Ontario while it continues to leverage that brand against us.”
Several brokers have since told CU that insurers tend to brand their direct channels with different names than their broker-channel companies — for example, Intact’s direct channel is branded as Belair, while Definity’s direct arm is known as Sonnet — to distinguish the company products sold by the broker channel from those sold by the companies’ direct channel competitors.
Isotta-Riches’ presence on the stage of the CEO Panel last week suggests the seven-year-old wounds have healed. And of course, the CEOs on the stage were asked to speak to their direct channel offerings.
“The IBAO and Aviva had a difference of opinion around Aviva direct,” Isotta-Riches said, directly addressing the elephant in the room. “I think what we’d said at the time is it’s an immaterial part of our business, and our focus remained very firmly on the broker channel. And seven years on from that, our direct business represents still less than 2% of our overall business, and we’ve added $2 billion in premium through brokers at the same time.
“So, from our perspective, what we were trying to do at the time was give customers choice. And if customers wanted to engage in that way, they could, and if they didn’t, they didn’t…We haven’t gone and tried to really push that as a strategy, but it has picked up some customers along the way. But it’s been immaterial in our strategy going forwards, really.
“The investments we are making in our business are very heavily biased towards the broker channel and will continue to be.”
Related: Ontario broker association suspends partnership with Aviva Canada
After Isotta-Riches made his presentation, Intact Financial Corporation president Louis Gagnon couldn’t resist taking a friendly jab at his competitor on stage. “Well, at Intact, we don’t do anything immaterial,” he quipped.
Turning serious, he reiterated that Intact will continue to support its direct channel arm, Belair, because “it’s good business” to offer alternatives that address the different ways consumers like to shop.
Belair is a “big engine of growth,“ Gagnon told brokers in the audience. “It’s a digital play that grows very well…If we look at the return on our investment of all the operations we have, and we invest accordingly to their return, and we will continue to invest in BelAir and in Intact at the same pace as the returns are coming. That’s what we’ve always been doing. Belair has existed since 1976. We bought that business, many, many, many moons ago. And it’s a great business…
“I haven’t said anything new here, just to tell you.”
Matthew Turack, group president of insurance at CAA Insurance noted an IBAO slide that showed 62% of personal lines insurance in Ontario is currently sold through the broker channel, whereas 95% of commercial lines business is sold through brokers.
Turack said he believed the market share of the broker channel is in fact higher. He contends the 62% number was skewed because all of CAAs’ business gets statistically lumped into the direct category, since CAA was a direct writer since 1974, prior to its expansion into the broker channel in 2019.
But in fact, Turack noted, 55% of CAA’s business is now sold through the broker channel, and 100% of CAA-subsidiary Echelon’s business is sold through brokers.
Paul MacDonald, executive vice president of personal insurance and digital channels at Definity, said his company uses its direct arm strategically to develop innovation and tech that it can later introduce into the broker business. This is done to prevent disruption to broker operations while the new technology is being tested, he said.
“In reality, the far biggest benefit that we’re getting out of those investments is on the broker side,” he said.
“I think the future is interesting, which is the broker channel and the direct channel have the same level of digital technology. What would happen then? Would customers swap one way or another?” he said.
“I think the broker channel has additional advantages that the direct channel will never have. To be honest, I think over the last year, particularly with the Cat activity we’ve had, that’s really shown the value of brokers. Because you can probably take a look at some direct company results, and they’re likely not as strong as the broker channel companies, because brokers do such a fantastic job of understanding their clients, helping their clients, warning the clients in advance of certain events, helping them after the fact.
“So, brokers are really fantastic stewards of their customers lives.”
Feature image courtesy of iStock.com/LaylaBird
