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One-Stop Financial Shopping: Will We Find the Holy Grail?

In the news stories surrounding the purchase of State Farm’s Canadian operations by Desjardins General Insurance Group, I saw a phrase that took me back to my insurance roots: ‘One-Stop Financial Shopping’. Conceptually, this has strong appeal for all parties – insurers, distributors, and clients.  In practice, however, results have been spotty.

I’m wondering if, in this new digital age, the concept of a single financial shopping experience is trending up, down, or sideways. I’d appreciate your thoughts.

Prime time became no time in the 1980s …

In the early 1980s, Aetna Canada adopted a program that had been developed by its large US parent.  The ‘Prime’ program was intended to provide independent P&C agents and brokers with products, services, and training to allow them to cross sell products from Aetna’s separate Life and P&C divisions.

From a marketing perspective it had appeal.   Operationally, it was a challenge.  Some agents/brokers were enticed by the prospect of having a wider portfolio, and greater support.  Others were dissuaded  by the thought of having to support multiple product lines in order to meet production goals.

At the end of the day, most existing agents/brokers took a wait-and-see approach.  The program slowly slipped off the radar.

This hasn’t changed much for brokers …

P&C Brokers have the opportunity of putting together a one-stop shopping experience on their own, by bringing in life specialists. But there doesn’t appear to be much momentum.

In a recent article, Randy Carroll, CEO of the Insurance Brokers Association of Ontario estimated that at least 45% of brokerage offices offer life and disability insurance products.  As to the future, Carroll said, “I don’t see it as changing that much. I still think it’s going to be something that needs to be available to consumers so you do have that opportunity for one-stop shopping if you want it.”

Will other channels have an opportunity, then?

Does the laissez-faire  attitude of brokers open the door for other distributor channels?  Probably not any more than the door has been opened to-date, at least for existing participants.

The State Farm,  single company model  (frequently called ‘captive agent’) has been around in Canada for quite sometime, and has garnered a respectable market share.  It is reasonable to expect that Desjardins will leverage this using its broad range of products.  This could be formidable, but not disruptive in its current construct.

Bank insurers are having some success in entering the insurance business, and ‘package’ products on their websites under the category ‘Insurance’.  However, there isn’t any obvious programme beyond that.

In the Management Discussion on TD’s 2013 Statements, TD describes its product and marketing strategies for its P&C and Life & Health lines in two separate paragraphs.  There is no mention of leveraging the two lines.  It is clear that a major thrust for its P&C products is towards affinity groups.  There is no mention of that for Life&Health.

So … business as usual?

Perhaps.  The problem is that in this era of rapid disruption, predicting stability is not always the best approach.  For example, Desjardins has demonstrated leadership in the Telematics area with its Adjusto product.  Could it build a strategy around using sensors to monitor homes and persons? (See, e.g. Will Insurers Help Consumers Get Ready for the Internet of Things?)

Could non-insurance entities with data gathering capabilities build out offerings leveraging their existing knowledge of a range of needs.  I’m thinking Amazon, Google, Facebook (see Google Embedding Innovation in its Insurance Foray).

Now, what do you think

We know that customers with multiple products are ‘stickier’ and more profitable than monoline buyers.  But the holy grail of cross marketing Life and  P&C products remains illusory for the most part.

Is a breakthrough possible?  I’d appreciate your comments below.

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