Insurance-Canada.ca - Where Insurance & Technology Meet

Who Owns the Client? A Modest Proposal

When we first started working with independent distributors  in the insurance industry (around the time the wooly mammoths were roaming Southwestern Alberta), one of the first liquid lunch debates focused around the ownership of the client.  We recall that the debate was long, intense, and came to no conclusion.  At the recent Insurance-Canada.ca Technology Conference, the same debate arose in two separate sessions, with about the same results (minus the bar tab).

We’d like to offer a modest proposal to bring this to some conclusion. It is less philosophical and, we believe, reflects the social reality that is emerging.  We’d like your thoughts.

To recap…

For our purposes, a client is a party (personal, familial, commercial) that has bought insurance.  Sometimes this is  extended to a prospect (not having purchased, but in the process of buying).

When the insurance is sold through a direct channel, the party is usually considered to be a client of the direct insurer.  However, when the insurance is sold through an independent distributor (agent/broker), the independent usually claims  ownership of the client.

In some cases, as one of our expert panelists pointed out, this ownership agreement is part of the distribution contract.

Is shared ownership possible?

Most insurers have not challenged the independents’ position as the client advocate, and have acknowledge that there is ownership.  However, as insurers have moved into aspects of client service (claims of course, but also direct billing, etc.), and have started direct to consumer advertising, they have started to poke at the notion of shared ownership.

Few independents are willing to give ground on this, however, and the debate continues, sometimes with great emotion.

Let’s take a short side trip ….

Before the commercial internet came into being, network providers competed for customers on the basis of their individual strengths.  Most companies had only one network provider that serviced all of their needs.  The networks closely held these ‘clients’.

The down side of this was the inability to link networks without proprietary and expensive work.  Email, file access, application sharing were mainly network specific functions.

The internetworking concept stood this on its head.  Instead of a proprietary network being an advantage, it became a boat anchor.  Initially, email was the killer application for internetworking, but then Tim Berners-Lee came up with an addressing scheme that allowed users to navigate a ‘web’ of applications, files, etc.

In a mere 20 years, this internetworking has become the standard.  Pure proprietary end-to-end networks are rare.  Security and standards of service have morphed to accommodate a cloud of connections.

And we are better for it.  We still select the network that we want to connect to, but these providers embrace, rather than exclude, other network participants.

Now, let’s be social …

On top of this web, we are seeing the maturation of social networking tools.  As nodes of connectivity are linked, so are people.  Twitter users re-tweet messages from everyone to anyone.  My business connections on LinkedIN connect with your connections and we all have more contacts to leverage.

And the social networks are interconnecting.  Tweets appearing on Facebook.  LinkedIN updates appearing on Twitter.

With little or no thought of ownership.

Is this a model?

Responsible social users take connections seriously.  I won’t expose my LinkedIn connections to people I don’t know, for instance.  I will, however, refer colleagues to people I do know.

Perhaps this is a model..  I ‘own’ the relationship with my colleague, and I maintain it by not abusing the relationship.  However, I don’t own the relationship that that colleague has with others, not even those that I have introduced.

We recognize there are professional and legal obligations between independent distributors and insureds to ensure quality of service.  But this does not necessitate ownership, not in our mind. 

What do you think? 

Is this a start towards resolution of the client ownership conundrum?  We’d be interested in your thoughts.  Leave a note below.

 

 

 

 

 

 

7 Comments

Blair Currie

I think that “ownership” is quickly becoming an outdated concept because it pre-supposes that policyholders can be “owned” when they cannot be owned. Further, there are different types players moving into the ecosystem that offer “service” in place of ownership, which is a much more compelling proposition to consumers.

As a marketing man I used to look at audiences in much the same way that insurance companies and brokers struggle over ownership. This came to an end with the rise of the internet, blogs and social media. Consumers can now express themselves and fight back. There is no longer a monologue but a dialogue where consumers have much more say in the matter, and push back against such concepts as ownership. Alternately put (for those who still cling to the old thinking) “The deer now have guns”, and they’re not afraid to use them.

Today’s policyholderw are not passive and are increasingly armed with information and can demystify the previously opaque concepts of insurance. They are have the tools to price compare and shop with the click of a button. There has been a shift in control and the customer will soon have the power to choose those parties who provide the best service at the best price. Many have not noticed or are reluctant to acknowledge this shift in control.

Added to the shift in control, other agents of change are entering the insurance ecosystem who will hasten the elimination of this idea of ownership. George Cooke mentioned a number of these at ICTC2014, including Financial institutions (e.g., Desjardins) Automotive OEMs, Auto dealers, Warranty providers. They all interested in replacing the dying concept of “owning the customer” with them being able to make money by serving customers.

The deer not only have guns but they have friends who are willing to help shed the shackles of ownership. And these friend are helping usher in a new age of insurance.

Reply
Peter Smith

Well stated Blair, the concept of ownership is a historical arrogance that has exceeded its useful life. Insurers and brokers have to shift their thinking to realize that they own nothing and must earn the right to have a relationship with the clients they serve. Traditionally, clients are not engaged more than once a year through their renewals or during a time of need like a claim. The focus has been on new business, our opportunity to earn the right to have a relationship with them comes with what we do when they need us most and how we show them that we are different and worthy of their time and effort.

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Mike O'Grady

This comment from Colin “broker can only ever be a supplier or an agent – never a customer” is one way of looking at it. However, brokers do purchase insurance from the insurer and sell it to the insured. how does this fit into your model, Colin?

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Colin Wright

As I mentioned in my earlier comment, the model considers which party gives consideration to which other party for an asset or the rendering of a service. I acknowledge that it doesn’t fit every aspect of broker distribution, MGAs for example, and so probably should have included a caveat to that effect. The important point I believe, is that greater collaboration between insurer and broker is critical and will work to the mutual benefit of all parties.

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Colin Wright

I fully agree with Blair’s comments, the idea of ‘ownership’ is anachronistic today. Back in 2008, I made some proposals to my then-employer around using data analytics to support profitable growth. As I worked for a company committed to the broker channel, a major impediment to doing so was the traditional insurer/broker/client relationship and the belief that the broker ‘owned’ the client. I advocated changing the paradigm and moving toward a model of ‘shared ownership’ that would work to the mutual benefit of all parties.

A couple of years later, while reflecting on this same thorny problem I tried to break it down by considering the underlying assumptions in the traditional model. I identified three roles in the relationship: supplier, customer, and agent. I concluded that a policyholder is only ever a customer regardless of whether they are dealing with the broker or the insurer. I further concluded that an insurer can be both a supplier and a customer, but a broker can only ever be a supplier or an agent – never a customer. I also examined where in the relationship money changed hands, i.e., who paid who.

Based on this analysis, the broker can’t really lay claim to ‘owning’ the customer (policyholder) and nor can the broker claim to be a customer of the insurer. The insurer and broker do, however, share a responsibility to deliver value to the policyholder – that’s what counts, not worrying about esoteric notions of ownership.

I invite anyone who’s interested to throw bricks at my analysis. It can be downloaded at http://corner2.ca/

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Mike O'Grady

Insurance has been reduced to the same level as buying a pair of shoes off the internet. As Blair has pointed out “There has been a shift in control and the customer will soon have the power to choose those parties who provide the best service at the best price.”

There is very little comment by Blair and his marketing sidekicks that brokers are selling LEGAL WORDINGS to the client. Subject to interpretation by insurers who often do not GET IT RIGHT! After the insurers say no and the broker can’t get it sorted out – who steps in? THE LAWYERS!

Even George Cook has gotten sucked into this nonsense! I heard his little speech on this – as a broker – get lost, George!

So the solution? Now, Insurance salespeople to qualify only need to pass a multiple choice exam and do not need ANY education whatsoever to sell this legal product.

Once the broker force wakes up and realizes that we need MINIMUM educational standards to sell legal insurance documents to vulnerable individuals (ie the public) – everyone will be much better served and looked after. Then we as brokers will not be led around by the nose by the marketing people who are leading this charge and making us believe that buying insurance or buying shoes or a car, George is the same thing!

Brokers need to WAKE UP!

Reply
Colin Wright

Back in 2008, I made some proposals to my then-employer around using data analytics to support profitable growth. As I worked for a company committed to the broker channel, a major impediment to doing so was the traditional insurer/broker/client relationship and the belief that the broker ‘owned’ the client. I advocated changing the paradigm and moving toward a model of ‘shared ownership’ that would work to the mutual benefit of all parties.

A couple of years later, while reflecting on this same thorny problem I tried to break it down by considering the underlying assumptions in the traditional model. I identified three roles in the relationship: supplier, customer, and agent. I concluded that a policyholder is only ever a customer regardless of whether they are dealing with the broker or the insurer. I further concluded that an insurer can be both a supplier and a customer, but a broker can only ever be a supplier or an agent – never a customer. I also examined where in the relationship money changed hands, i.e., who paid who.

Based on this analysis, the broker can’t really lay claim to ‘owning’ the customer (policyholder) and nor can the broker claim to be a customer of the insurer. The insurer and broker do, however, share a responsibility to deliver value to the policyholder – that’s what counts, not worrying about esoteric notions of ownership. You can review and poke holes in my analysis at corner2.ca.

Reply

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