Economical Insurance still working with brokers despite Sonnet launch
Published: March 4, 2017
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Industry News
Economical Insurance has recently launched Sonnet, a direct writer solution that could be disruptive to brokers in Canada. Indeed, the product was described as a “disruptive innovation” by a speaker at a recent conference. However, a senior executive from Economical said that there was room in the market and the company will continue to work with brokers.
The first approach is innovating technology, while the other is using innovation within a business model. She was speaking at an Insurance-Canada.ca Technology Conference session titled What an Insurer Must do to Retain Clients.
“I think Sonnet is a great business model innovation example – where it’s about doing business differently,” Britton said of Economical Insurance’s online direct channel, which went live May 9, 2016.
Economical insurance leverages Sonnet to sell personal home, auto, tenant, and landlord coverage.
Sonnet was designed to “target a segment of the consumers who are really comfortable making all their financial transactions online,” said Karen Gavan, then Economical’s chief executive officer, said last year. “They don’t want to talk to anyone, including whether it’s a call centre or a broker’s office. They want to be self-empowered and they want to be able to cancel whenever they want to, they want to be able to make changes whenever they want, that’s what our research showed.”
At Insurance-Canada.ca Technology Conference, Britton said “Is it about sustaining your current business? If it is, I think the most important thing that I would like to leave with you is the thought that you have to involve your existing employees in that type of innovation.”
“Disruptive innovation – which is a key area for everyone – in my opinion needs to be outside of the organization, because it’s very distracting,” Britton said. “It’s also much more difficult when you are thinking about something that is disruptive, like, for instance, Sonnet launching a direct to consumer solution. It’s best outside the organization, leveraging talent that you likely don’t have.”
Alice Keung, Economical’s chief information officer, defended the product and said the company still values brokers and will continue to use them fro advice.
“There is a significant segment who will continue to value the advice of a broker,” Keung said during a session titled InsureTech and MatureTech: Blending New and Old. “So in our case, while Sonnet is certainly Canada’s first digital end to end direct, for us the broker is still a valuable partnership. But I do think that in the world of the broker channel, it makes the integration work on the technology side extremely complicated.”
“You have all kinds of middle layers, then you have your own systems, then you have a third-party data provider,” Keung said. “Integrating all of that is really just so messy that every time you think of it you say, ‘Okay, forget this, maybe I will just put it in next year’s business plan.’ So you really have to map it out and work together and say, ‘How do we transform that experience?’ So we need the brokers to provide that input and we need to provide them with the support because after all they are here to stay and they are an important part of the landscape.”