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The Insurance Purchase Decision - Canada - December 2014

“Moving from a product- to a solution-centred relationship is the challenge that insurance companies face as they strive to increase brand loyalty and share of customer wallet.”
– Sanjay Sharma, Senior Financial Services Analyst

This report discusses the following key topics:

  • Consolidation and how insurance companies can increase their share of customer wallet
  • Framing the discussion beyond low premiums
  • Insurance brokers are still the predominant purchase channel but some trust issues persist
  • Targeting under-penetrated segments such as younger consumers, singles, Chinese Canadians and the disengaged

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Table of contents

  1. Introduction

      • Definition
        • Excluded
          • Abbreviations
          • Executive Summary

              • Market drivers
                • Canadian economy to pick up speed, but many risks remain
                  • Outlook on the real estate and housing market
                    • Wealth distribution in Canada
                      • Household debt in Canada
                        • Consumer confidence
                          • Innovations
                            • Brand communications
                              • The consumer
                                • More than half of Canadians have auto, life and home insurance
                                  • Figure 1: Ownership of insurance products, September 2014
                                • Channel preferences vary by product
                                  • Figure 2: Purchase channels for insurance products, September 2014
                                • Low premiums are the most important choice factor
                                  • Figure 3: Importance of factors when buying insurance, September 2014
                                • Around three quarters of insurance owners automatically renew with their existing provider
                                  • Figure 4: Renewal Behaviour with regard to existing policies, September 2014
                                • Older females show a marked preference for insurance brokers
                                  • Figure 5: Summary of Attitudes towards insurance purchase, September 2014
                                • What we think
                                • Issues and Insights

                                    • Consolidation and how insurance companies can increase their share of customer wallet
                                      • The facts
                                        • The implications
                                          • Framing the discussion beyond low premiums
                                            • The facts
                                              • The implications
                                                • Insurance brokers are still the predominant purchase channel but some trust issues persist
                                                  • The facts
                                                    • The implications
                                                      • Targeting under-penetrated segments such as younger consumers, singles, Chinese Canadians and the disengaged
                                                        • The facts
                                                          • The implications
                                                          • Trend Application

                                                              • Trend: Let’s Make a Deal
                                                                • Trend: Prove it
                                                                  • Trend: Extend my Brand
                                                                  • Market Drivers

                                                                    • Key points
                                                                      • Economic overview
                                                                        • IMF expects the Canadian economy to pick up speed, but many risks remain
                                                                          • Figure 6: Canada’s GDP, by quarter, Q1 2008-Q1 2014
                                                                          • Figure 7: Household disposable incomes and savings in Canada, Q1 2008-Q1 2014
                                                                          • Figure 8: Canada’s unemployment rate, by gender, 2008-14
                                                                        • Interest rates, inflation and market volatility
                                                                          • Figure 9: Inflation rates in Canada, 2004-14
                                                                        • Outlook on the real estate and housing market
                                                                          • British Columbia has the highest net worth
                                                                            • Figure 10: Canada median net worth, by province, 2012
                                                                          • Household debt in Canada
                                                                            • Consumer confidence
                                                                              • Demographic overview
                                                                                • Population count and growth in Canada
                                                                                  • Figure 11: Share of population of Canada, by territory/province, 2014
                                                                                • Canada’s population is expected to age in the coming years
                                                                                  • Figure 12: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                                                                  • Figure 13: Projected trends in the age structure of the Canada population, 2014-19
                                                                                • Living longer but not necessarily healthier
                                                                                  • Figure 14: Average life expectancy* and health-adjusted life expectancy (HALE)**, by disease status and gender, 2013
                                                                              • Market Data for Selected Insurance Products

                                                                                • Key points
                                                                                  • Auto insurance
                                                                                    • Homeowners insurance
                                                                                      • Pet insurance
                                                                                        • Life insurance
                                                                                          • Health insurance
                                                                                            • Mortgage insurance
                                                                                              • Travel insurance
                                                                                              • Strengths and Weaknesses

                                                                                                • Strengths
                                                                                                  • Weaknesses
                                                                                                  • Who’s Innovating?

                                                                                                    • Key points
                                                                                                      • Cigna Health Matters Wellness Tool
                                                                                                        • Belairdirect’s app to curb distracted driving
                                                                                                          • State Farm claims app adds object recognition for simple submission
                                                                                                            • Swiftcover offering discounts to drivers who install a dashcam
                                                                                                              • Intrepid 24/7’s Travel Navigator app
                                                                                                              • Companies and Products

                                                                                                                • Manulife
                                                                                                                  • Overview and company information
                                                                                                                    • Recent activity
                                                                                                                      • Sun Life
                                                                                                                        • Overview and company information
                                                                                                                          • Recent activity
                                                                                                                            • Desjardins
                                                                                                                              • Overview and company information
                                                                                                                                • Recent activity
                                                                                                                                  • Intact Insurance
                                                                                                                                    • Overview and company information
                                                                                                                                      • Recent activity
                                                                                                                                        • Allianz Global Assistance
                                                                                                                                          • Overview and company information
                                                                                                                                            • Recent activity
                                                                                                                                              • Canada Mortgage and Housing Corporation
                                                                                                                                                • Overview and company information
                                                                                                                                                  • Recent activity
                                                                                                                                                  • Brand Communication and Promotion

                                                                                                                                                    • Key points
                                                                                                                                                      • Belairdirect is the leading insurance direct mailer
                                                                                                                                                        • Figure 15: Direct mail insurance volume from October 2013 to October 2014
                                                                                                                                                      • Featured campaigns from Mintel Comperemedia
                                                                                                                                                        • Belairdirect reduced rates for car insurance and combination discounts campaign
                                                                                                                                                          • RBC Insurance Consolidation Offer
                                                                                                                                                            • Health and dental insurance for CARP members
                                                                                                                                                              • Pet insurance from Western Financial Insurance Company
                                                                                                                                                              • The Consumer – Ownership of Insurance Products

                                                                                                                                                                • Key points
                                                                                                                                                                  • More than half of Canadians have auto, life and home insurance
                                                                                                                                                                    • Figure 16: Ownership of insurance products, September 2014
                                                                                                                                                                  • Singles have a significantly lower insurance ownership rate
                                                                                                                                                                    • Figure 17: Insurance ownership by marital status, September 2014
                                                                                                                                                                  • More than a third of Canadians have four or more types of insurance
                                                                                                                                                                    • Figure 18: Repertoire of ownership of insurance products, September 2014
                                                                                                                                                                  • CHAID analysis: Identifying sub-groups more likely to own insurance
                                                                                                                                                                    • Methodology
                                                                                                                                                                      • Adults aged 35-64 married/in a civil partnership/living as married with household incomes $50,000+ over-index on life insurance ownership by 18%
                                                                                                                                                                        • Figure 19: Life Insurance – CHAID – Tree output, December 2014
                                                                                                                                                                      • Adults married/in a civil partnership/living as married/widowed with household incomes $75,000+ over-index on health insurance ownership by 14%
                                                                                                                                                                        • Figure 20: Health insurance – CHAID – Tree output, December 2014
                                                                                                                                                                      • Adults aged 45+ with household incomes greater than $75,000 over-index on homeowners insurance ownership by 42%
                                                                                                                                                                        • Figure 21: Homeowners Insurance – CHAID – Tree output, December 2014
                                                                                                                                                                    • The Consumer – Purchase Channel

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Channel preferences vary by product
                                                                                                                                                                          • Figure 22: Purchase channels for insurance products, September 2014
                                                                                                                                                                      • The Consumer – Choice Factors

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Low premiums are the most important choice factor
                                                                                                                                                                            • Figure 23: Importance of factors when buying insurance, September 2014
                                                                                                                                                                          • Trusted company most important factor for older Canadians
                                                                                                                                                                            • Figure 24: Importance of choice factors: comparison of 18-24 and over-65 age segments
                                                                                                                                                                          • Adults aged 18-44 with homeowners and auto insurance over-index by 15% on rating the importance of low/affordable premiums for choosing their policy
                                                                                                                                                                            • Figure 25: Low/affordable monthly premiums – CHAID – Tree output, December 2014
                                                                                                                                                                        • The Consumer – Renewal Behaviour

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Around three quarters of insurance owners automatically renew with their existing provider
                                                                                                                                                                              • Figure 26: Renewal Behaviour with regard to existing policies, September 2014
                                                                                                                                                                            • Key driver analysis
                                                                                                                                                                              • Methodology
                                                                                                                                                                                • Indicator variables
                                                                                                                                                                                  • Inertia is a strong driver of automatic renewal of insurance policies
                                                                                                                                                                                    • What does this mean for insurance companies?
                                                                                                                                                                                      • Figure 27: Key drivers of insurance policy renewal behavior, December 2014
                                                                                                                                                                                  • The Consumer-Reasons for Shopping Around at the Time of Renewal

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Lower premiums, better coverage and checking the competitiveness of the quote are three main reasons for shopping around
                                                                                                                                                                                        • Figure 28: Reasons for shopping around at the time of renewal, September 2014
                                                                                                                                                                                    • The Consumer – Attitudes towards Insurance Purchase

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Summary of attitudes
                                                                                                                                                                                          • Figure 29: Summary of Attitudes towards insurance purchase, September 2014
                                                                                                                                                                                        • Older females show a marked preference for insurance brokers
                                                                                                                                                                                          • Figure 30: Opinions about insurance brokers/agents, September 2014
                                                                                                                                                                                        • About half of insurance owners prefer to consolidate their insurance policies with one provider
                                                                                                                                                                                          • Figure 31: Attitudes towards consolidation of policies and switching, September 2014
                                                                                                                                                                                        • Premiums are more important than deductibles as a purchase influencer
                                                                                                                                                                                          • Figure 32: Attitudes towards Premiums vs deductibles, September 2014
                                                                                                                                                                                        • Life events have major impact on insurance decision making, particularly for females
                                                                                                                                                                                          • Figure 33: perceptions of the importance of insurance, September 2014
                                                                                                                                                                                      • The Consumer – Chinese Canadians and Insurance Purchase

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Chinese Canadians have a lower ownership rate of homeowners and mortgage insurance despite having similar home ownership rates
                                                                                                                                                                                            • Figure 34: Ownership of insurance products, Chinese Canadians compared to Whites/Caucasians, September 2014
                                                                                                                                                                                          • Chinese Canadians more likely to be influenced by recommendations from family/friends
                                                                                                                                                                                            • Figure 35: Choice factors: Chinese Canadians compared to Whites/Caucasians, September 2014
                                                                                                                                                                                          • Chinese Canadians more likely to shop around at the time of policy renewal
                                                                                                                                                                                            • Figure 36: Attitudes towards insurance purchase, Chinese Canadians compared to Whites/Caucasians, September 2014
                                                                                                                                                                                        • The Consumer – Target Groups

                                                                                                                                                                                          • Key points
                                                                                                                                                                                              • Figure 37: Target groups, September 2014
                                                                                                                                                                                            • Bargain Hunters (24%)
                                                                                                                                                                                              • Broker Lovers (30%)
                                                                                                                                                                                                • Consolidators (20%)
                                                                                                                                                                                                  • Disengaged (24%)
                                                                                                                                                                                                  • Appendix – The Consumer – Ownership of Insurance Products

                                                                                                                                                                                                      • Figure 38: Ownership of insurance products, September 2014
                                                                                                                                                                                                      • Figure 39: Most popular ownership of insurance products, by demographics, September 2014
                                                                                                                                                                                                      • Figure 40: Next most popular ownership of insurance products, by demographics, September 2014
                                                                                                                                                                                                    • Repertoire analysis
                                                                                                                                                                                                      • Figure 41: Repertoire of Ownership of insurance products, September 2014
                                                                                                                                                                                                      • Figure 42: Repertoire of ownership of insurance products, by demographics, September 2014
                                                                                                                                                                                                      • Figure 43: Ownership of insurance products, by ownership of insurance products, September 2014
                                                                                                                                                                                                  • Appendix – The Consumer – Insurance Purchase Channel

                                                                                                                                                                                                      • Figure 44: Insurance purchase channel, September 2014
                                                                                                                                                                                                      • Figure 45: Insurance purchase channel – Life, by demographics, September 2014
                                                                                                                                                                                                      • Figure 46: Insurance purchase channel – Health, by demographics, September 2014
                                                                                                                                                                                                      • Figure 47: Insurance purchase channel – Auto/Motorcycle, by demographics, September 2014
                                                                                                                                                                                                      • Figure 48: Insurance purchase channel – Travel, by demographics, September 2014
                                                                                                                                                                                                      • Figure 49: Insurance purchase channel – Homeowners, by demographics, September 2014
                                                                                                                                                                                                      • Figure 50: Insurance purchase channel – Renters, by demographics, September 2014
                                                                                                                                                                                                      • Figure 51: Insurance purchase channel – Mortgage, by demographics, September 2014, September 2014
                                                                                                                                                                                                  • Appendix – The Consumer – Choice Factors

                                                                                                                                                                                                      • Figure 52: Choice factors for choosing policy and/or provider, September 2014
                                                                                                                                                                                                      • Figure 53: Most popular choice factors for choosing policy and/or provider, by demographics, September 2014
                                                                                                                                                                                                      • Figure 54: Next most popular choice factors for choosing policy and/or provider, by demographics, September 2014
                                                                                                                                                                                                  • Appendix –The Consumer – Renewal Behaviour

                                                                                                                                                                                                      • Figure 55: Renewal behaviour, September 2014
                                                                                                                                                                                                      • Figure 56: Renewal behaviour, by demographics, September 2014
                                                                                                                                                                                                    • Key driver analysis
                                                                                                                                                                                                      • Interpretation of results
                                                                                                                                                                                                          • Figure 57: insurance policy renewal behavior – Key driver output, December 2014
                                                                                                                                                                                                      • Appendix – The Consumer – Reasons for Shopping Around at the Time of Renewal

                                                                                                                                                                                                          • Figure 58: Reasons for shopping around, September 2014
                                                                                                                                                                                                          • Figure 59: Reasons for shopping around, by demographics, September 2014
                                                                                                                                                                                                      • Appendix – The Consumer – Attitudes towards Insurance Purchase

                                                                                                                                                                                                          • Figure 60: Attitudes towards insurance purchase, September 2014
                                                                                                                                                                                                          • Figure 61: Agreement with the statements ‘It is better to have all insurance policies with a single company/provider’ and ‘Working with an insurance agent is the best way to get policies to suit my needs’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 62: Agreement with the statements ‘Lower deductibles are more important than lower premiums(ie monthly payments) when selecting a policy’ and ‘It is important to shop around and get quotes every time a policy comes up for renewal’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 63: Agreement with the statements ‘Premiums (ie monthly payments) are the most important consideration when choosing an insurance company’ and ‘It is important to re-evaluate insurance needs after major life events (eg birth of a child, new job, new car, new home)’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 64: Agreement with the statements ‘I prefer to buy insurance from a subsidiary of a bank (eg RBC Insurance, TD Insurance)’ and ‘I prefer to deal with an agent rather than purchase a policy online’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 65: Agreement with the statements ‘I like to take my chances and generally avoid buying insurance’ and ‘I would be more likely to use insurance agents if I trusted them more’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 66: Agreement with the statements ‘I expect my insurance provider to reward me if I renew with them (eg lower premiums/deductibles, better coverage, etc.)’ and ‘I expect my insurance provider to reward me if I renew with them (eg lower premiums/deductibles, better coverage, etc.)’, by demographics, September 2014
                                                                                                                                                                                                          • Figure 67: Attitudes towards insurance purchase, by ownership of insurance products, September 2014
                                                                                                                                                                                                      • Appendix – The Consumer – Chinese Canadians and Insurance Purchase

                                                                                                                                                                                                          • Figure 68: Selected demographics by total population against Chinese Canadians, September 2014
                                                                                                                                                                                                      • Appendix – The Consumer – Target Groups

                                                                                                                                                                                                          • Figure 69: Target groups, September 2014
                                                                                                                                                                                                          • Figure 70: Target groups, by demographics, September 2014
                                                                                                                                                                                                          • Figure 71: Ownership of insurance products, by target groups, September 2014
                                                                                                                                                                                                          • Figure 72: Insurance purchase channel – Life, by target groups, September 2014
                                                                                                                                                                                                          • Figure 73: Insurance purchase channel – Health, by target groups, September 2014
                                                                                                                                                                                                          • Figure 74: Insurance purchase channel – Auto/Motorcycle:, by target groups, September 2014
                                                                                                                                                                                                          • Figure 75: Insurance purchase channel – Travel, by target groups, September 2014
                                                                                                                                                                                                          • Figure 76: Insurance purchase channel – Homeowners, by target groups, September 2014
                                                                                                                                                                                                          • Figure 77: Insurance purchase channel – Renters, by target groups, September 2014
                                                                                                                                                                                                          • Figure 78: Insurance purchase channel – Mortgage, by target groups, September 2014
                                                                                                                                                                                                          • Figure 79: Choice factors for choosing policy and/or provider, by target groups, September 2014
                                                                                                                                                                                                          • Figure 80: Renewal behaviour, by target groups, September 2014
                                                                                                                                                                                                          • Figure 81: Reasons for shopping around, by target groups, September 2014
                                                                                                                                                                                                          • Figure 82: Attitudes towards insurance, by target groups, September 2014

                                                                                                                                                                                                      Companies Covered

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                                                                                                                                                                                                      The Insurance Purchase Decision - Canada - December 2014

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