- Where Insurance & Technology Meet

Regulation and Consumer Satisfaction: A Tale of Two E-Commerce-in-Insurance Reports

The insurance consumer was in the spotlight of a couple of reports recently.  A discussion paper issued by the Canadian Council of Insurance Regulators (CCIR) on regulation of electronic commerce in insurance has met its goal of stimulating discussion.  Meanwhile, a report by J.D. Power on consumer satisfaction with insurance put forth some interesting data around the impact of technology in insurance sales and service.  We’d be interested in your comments on either or both.

Canadian Council of Insurance Regulators – Electronic Commerce in Insurance Products

The CCIR Issues paper was published in January, and invited comments from industry stakeholders and interested parties.  Submissions were received and are published on the same CCIR web page.  There is intelligent commentary on security, accuracy, reliability, etc.  There are admonitions and compelling arguments promoting more control in some areas, less control in others.

Almost everyone agrees that the Internet has become an important medium for comparison shopping.   However, when it comes to completing the purchase function,  not surprisingly, broker associations and direct response organizations have somewhat different views.  The response from the Insurance Brokers Association of Canada says:

One of the most important concepts for regulators to keep in mind is that electronic mediums do not, in our view, constitute a separate or novel method of distribution. Electronic mediums are simply a different form of communication and/or business transaction; similar to the advent of the telephone, telex, fax machine, ATM, smart phone apps etc… (emphasis supplied)

The Canadian Association of Direct Response Insurers has a different take:

The internet offers convenience and flexibility and online transactions are a secure and efficient way to conduct business. Consumers expect consistency of service as well as flexibility when they conduct online transactions regardless of the type of transaction. (emphasis supplied)

So is the internet just a communications channel or does is have its own functional dynamics?

J.D. Power 2012 U.S. Auto Insurance Study

We’re certain that the CCIR will take all of the competing interests into account and will recommend actions that balance the needs of all groups.  Meanwhile, however, consumers are making their own decisions.  We are seeing interesting trends in the US, courtesy of the J.D. Power 2012 U.S. Auto Insurance Study.

As reported in PropertyCasualty360, the J.D. Power survey found that consumer satisfaction with Auto Insurance rose to the highest level reached since the survey was introduced in 2000.  While satisfaction with price remained level, the consumer sentiment rose for all other factors measured, with “significant improvement in policy offerings and interaction.”

According to Mark Garrett, J.D. Powers Research Director, one of the most surprising findings is what drives satisfaction.  “In 2007, interaction with an agent was the dominant driver of satisfaction for auto-insurance buyers, but in 2012 it was policy offerings,” the article reports.

“We look at the six-year trend and we see that the role of the agent is significantly different,” says Garrett. “It’s not all about the agent anymore.”

Garret indicates that the growing robustness of websites providing services is making the impact of personal involvement less important.  This is reflected in a decline in usage of local agents.  Significantly, however, Garrett notes that this isn’t a wholesale rejection of agents.   Garrett notes that there is a strong indication that agents who embrace technology produce a higher customer satisfaction experience.

Your Turn

So, what do you think?  Are regulatory changes required to control technology in distribution and service of insurance?  Or are consumer choices outpacing regulations?  Do you feel that J.D. Power findings are applicable in Canada, or is our environment substantially different?

Your comments below are welcome.