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Insurance Purchase Channels - Canada - September 2016

“On-demand insurance through digital channels is set to increase in popularity but for now traditional channels dominate the distribution landscape.”

–    Sanjay Sharma, Senior Financial Services Analyst

This report will cover the following areas:

  • Auto, life and home insurance have the highest ownership rates
  • Type of distribution channel used is product dependent
  • Around half of consumers are open to switching for a major price cut
  • Brokers are generally viewed favourably, but some trust issues persist
  • Most insurance is sold through people

Insurance companies are leveraging multiple distribution channels to suit customer preferences including traditional channels such as brokers and agents, through affinity programs with member associations, retail outlets, travel agencies, through employers for group sales, digital channels, etc. But they also face competition from banks who are aggressively promoting sales of certain insurance products through their subsidiaries (banks in Canada are prohibited from selling most types of insurance through their branches).

Insurance purchase channels and distribution structures are evolving with technology and time as digital channels and on-demand insurance products are gaining market acceptance. For now, agents and brokers play an important role but there is more demand for value-added advice.

This Report covers consumer attitudes and behaviour related to the different purchase channels used for different insurance products. It explores usage of purchase channels, methods of distribution, willingness to buying insurance online, openness to use newer methods of distribution and attitudes about buying insurance.

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Auto, life and home insurance have the highest ownership rates
                • Figure 1: Ownership of insurance products, July 2016
              • Type of distribution channel used is product dependent
                • Figure 2: Distribution channel, by type of insurance, July 2016
              • Around half of consumers are open to switching for a major price cut
                • Figure 3: Attitudes related to purchase preferences, July 2016
              • Brokers are generally viewed favourably, but some trust issues persist
                • Figure 4: Attitudes about insurance brokers, July 2016
              • Most insurance is sold through people
                • Figure 5: Methods used for insurance purchase, July 2016
              • The opportunities
                • Under-penetrated segments such as younger consumers and LGBTs
                  • Brokers face challenges as distribution channels evolve
                    • Younger consumers more willing to embrace digital channels
                      • Consumers are very hesitant about buying insurance from newer companies
                        • Figure 6: Attitudes towards insurance purchase, July 2016
                      • What it means
                      • The Market – What You Need to Know

                        • Canada’s population is expected to age in the coming years
                          • The population is growing and becoming more ethnically diverse
                            • Women outnumber men in Canada and live longer
                              • Canadian economy endures a poor second quarter
                              • Market Factors

                                • Canada’s population is expected to age in the coming years
                                  • Figure 7: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                  • Figure 8: Projected trends in the age structure of the Canada population, 2014-19
                                • The population is growing and becoming ethnically diverse
                                  • Women outnumber men in Canada and live longer
                                    • Women’s representation and participation in the labour force
                                      • Wage gap declines but women still earn less than men
                                        • Health overview and risk factors
                                          • Obesity and sedentary lifestyles
                                            • Alzheimer’s/dementia
                                              • Smoking
                                                • Stroke
                                                  • Canadian economy endures a poor second quarter
                                                  • Key Players – What You Need to Know

                                                    • Expansions seen in digital health
                                                      • Manulife to insure those who are HIV-positive
                                                        • Economical Insurance activates multi-channel distribution with launch of direct channel
                                                          • Intact Financial Corporation makes Strategic Investment in Metromile
                                                            • Ageas and Trov launch on-demand insurance apps
                                                              • Manulife’s Vitality Brand Campaign
                                                                • Desjardins Insurance engages key cultural communities
                                                                  • Ontario approves insurance plan aimed at Uber
                                                                  • Industry Developments

                                                                    • Sun Life launches new business area to expand in digital health
                                                                      • Digital health insurance start-up, League, raises $25 million from major Canadian investors
                                                                        • Manulife to insure those who are HIV-positive
                                                                          • Manulife to cut down on insurance application medical tests
                                                                            • Economical Insurance activates multi-channel distribution with launch of direct channel
                                                                              • Intact Financial Corporation makes strategic investment in Metromile
                                                                                • GoodLife partners with Manulife Vitality
                                                                                  • Ontario approves insurance plan aimed at Uber
                                                                                    • Aviva Canada announces the acquisition of RBC General Insurance Company
                                                                                      • International market innovations
                                                                                        • Ageas and Trov launch on-demand insurance apps
                                                                                          • Lemonade and other companies bring the sharing economy to insurance
                                                                                            • Risk Unit Based Policies
                                                                                              • Sure’s on-demand ‘micro-duration’ insurance policies
                                                                                              • Marketing Campaigns

                                                                                                • Manulife’s Vitality Brand Campaign
                                                                                                  • Desjardins Insurance engages key cultural communities
                                                                                                    • Manulife keeps TV viewers on the edge of their seat with cliff-hanger ads
                                                                                                      • TD’s insurance campaign around customer experience
                                                                                                      • The Consumer – What You Need to Know

                                                                                                        • Auto, life and home insurance have the highest ownership rates
                                                                                                          • Type of distribution channel used is product dependent
                                                                                                            • Most insurance is sold through people
                                                                                                              • Around half of consumers are open to switching for a major price cut
                                                                                                                • Brokers are generally viewed favourably, but some trust issues persist
                                                                                                                  • Younger consumers more willing to embrace digital channels
                                                                                                                  • Insurance Ownership

                                                                                                                    • Auto, life and home insurance have the highest ownership rates
                                                                                                                      • Figure 9: Ownership of insurance products, July 2016
                                                                                                                    • Age and income are key determinants of insurance ownership
                                                                                                                      • Figure 10: Ownership of insurance products, by age, July 2016
                                                                                                                    • LGBTs under-index on auto, life and home but have more pet insurance
                                                                                                                      • Figure 11: Ownership of insurance products (Significant differences), LGBTs vs overall population, July 2016
                                                                                                                    • Around nine in ten over-45s have auto insurance
                                                                                                                      • Quebecers own more life insurance
                                                                                                                        • Home insurance is very age and income dependent
                                                                                                                          • Around half of over-65s have health insurance
                                                                                                                            • Selling travel insurance to Chinese Canadians is an opportunity
                                                                                                                              • Mortgage insurance peaks among 35-44s, while women 25-34 over-index on renters insurance
                                                                                                                                • Pet insurance over-indexes among those earning more than $150,000/year
                                                                                                                                  • Regional differences present specific opportunities
                                                                                                                                  • Insurance Purchase Methods

                                                                                                                                    • Most insurance is sold through people
                                                                                                                                      • Figure 12: Methods used for insurance purchase, July 2016
                                                                                                                                    • Quebecers more likely to use phone while Chinese Canadians over-index on online purchases
                                                                                                                                      • Figure 13: Purchase methods, significant differences among demographic groups, July 2016
                                                                                                                                    • Younger consumers more willing to embrace digital channels
                                                                                                                                      • Figure 14: Attitudes related to technology and insurance purchase, July 2016
                                                                                                                                    • Mobile has limited appeal at present
                                                                                                                                      • Around half of consumers are open to buying insurance online
                                                                                                                                        • Figure 15: Attitudes related to online insurance purchase, July 2016
                                                                                                                                    • Insurance Distribution Channels

                                                                                                                                      • Popularity of distribution channel is product dependent
                                                                                                                                        • Figure 16: Distribution channel, by type of insurance, July 2016
                                                                                                                                      • For auto insurance, older consumers more likely to use brokers
                                                                                                                                        • Younger consumers more likely to use bank subsidiaries for home insurance
                                                                                                                                          • Men have a higher direct purchase rate of life insurance
                                                                                                                                            • Group sales through employers is the dominant channel for health insurance
                                                                                                                                              • Travel insurance sales is more multi-channel
                                                                                                                                                • Brokers are generally viewed favourably, but some trust issues persist
                                                                                                                                                  • Figure 17: Attitudes about insurance brokers, July 2016
                                                                                                                                                • Older consumers have more positive views about brokers, while Quebecers are relatively less favourably inclined
                                                                                                                                                  • Brokers face challenges as distribution channels evolve
                                                                                                                                                  • Insurance Purchase Decision

                                                                                                                                                    • Around half of consumers are open to switching for a major price cut
                                                                                                                                                      • Figure 18: Attitudes related to purchase preferences, July 2016
                                                                                                                                                    • Younger consumers more influenced by recommendations
                                                                                                                                                      • Consumers are very hesitant about buying insurance from newer companies
                                                                                                                                                        • Figure 19: Attitudes towards insurance purchase, July 2016
                                                                                                                                                    • General Attitudes towards Insurance

                                                                                                                                                      • Majority of consumers agree on the need for re-evaluating insurance needs after major life events
                                                                                                                                                        • Figure 20: Attitudes related to purchase decisions, July 2016
                                                                                                                                                      • Majority of consumers rate price as the most important choice factor
                                                                                                                                                        • Figure 21: General attitudes about insurance, July 2016
                                                                                                                                                    • Appendix – Data Sources and Abbreviations

                                                                                                                                                      • Data sources
                                                                                                                                                        • Consumer survey data
                                                                                                                                                          • Consumer qualitative research
                                                                                                                                                            • Abbreviations and terms

                                                                                                                                                            Companies Covered

                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                            Insurance Purchase Channels - Canada - September 2016

                                                                                                                                                            US $3,995.00 (Excl.Tax)