Since Desjardins’ May 13th launch of Ajusto – a Telematics enabled Usage Based Insurance (UBI) product – there have been active discussions about how independent brokers in Canada could fit in as distributors of this type of product. We think that brokers have a unique opportunity to define the future for themselves and their customers if they can look at the big picture. We’d really like your thoughts on this.
How Brokers Think About Their Role …
A recent discussion on the LinkedIn Canadian Insurance Broker Strategy Group offered the following comments from brokers:
- “The next generation telematics has the ability to be a game changer… we (brokers) run the risk of falling behind times to our detriment.”
- “I really have to wonder whether telematics will prove useful over the long term or become a passing fad. What happened to the Aviva trial?”
- Telematics won’t change driving behaviour overall, and some drivers will be penalized to enable others to get discounts.
- “Are or should Brokers have the ability to view the Telemnatics data”
- “How does Telematics fit into the rating regulations in many provinces? Don’t all these discounts have to filed and worked into a rating scheme, or do they hybrid it with the existing class/dr system?”
We believe that virtually all of these comments (except for the first) miss the big picture.
What’s The Big Picture?
Here’s the big picture from our perspective: Given this is a new and rapidly evolving environment, brokers can fit in wherever they want if (and this is a big if) they can get together with enough critical mass to define the future.
- Canada is just restarting its implementations. At present, the insurers are direct writers. However, one doesn’t have to go far to find broker companies in serious discussions about starting.
- In the US, the acknowledged leader in UBI implementation is Progressive, which distributes through independents and directly. In reality, it has a penetration of less than 20% of its potential auto base. Direct writers and Agency companies are coming on quickly.
- In the UK (a more mature market for UBI), IT supplier SSP has partnered with Wunelli, a leader in telematics technology to offer a “mass market” UBI programme for independents.
Our belief is that the pioneers are defining the future of UBI on a regional basis. In Canada, brokers are still major players and, if some or all of them can come together in partnership with some leading insurers, they could define a future which meets the needs of the brokers and their customers.
This will require some education, some time, and some creativity. But, if UBI is the way of the future for a significant portion of the marketplace (and we believe it is), this is an investment in protecting current market share and potentially expanding.
The alternative is to wait for others to define the role of the broker on their own.
What Do You Think?
Is UBI a future direction in Canada? If so, should brokers have a role? And, if so, do brokers have the interest and energy to create the future?