Small Commercial Broker Survey Results

© CGI Group Inc. CONFIDENTIAL

NICC 2014 Small Commercial Broker Survey

CGISeptember 2014

About NICC• What is it?

• Who attends?

• The purpose of the panel

• Survey of ORBiT members/non-members open July to August 30, 2014

• 55 respondents took part in the survey

2

CFIB Shares Member Feedback on Insurance

About CFIB:•Non-partisan advocacy organization representing privately-owned Canadian businesses •109,000 members in all industry sectors•50% have < 20 employees; 80% have <5 employees

3

Small Business Sector in Canada

• Make up 50% of the Canadian economy in terms of GDP and employment

• Create 50 – 75 % of total net new jobs• Represents a larger proportion of the economy than in

U.S. and other developed countries• Churn at a rate of 30-60% every 5 years • Almost 50% of jobs created in next 15 years will be from

businesses not yet started • <1% of businesses are fast growing • High growth firms are more common in low and medium

tech sectors • Entrepreneurial sweet spot are ages 45-65

4

The Market Stratification Challenge in Canada

Which metric do we use to define the strata?

Sources

Note 1: Industry Canada

Other: Premium, Sales and Broker revenue stratification is based on experience in the Canadian commercial marketplace.

5

Canada Premium Sales Employee Size

Broker Revenue

Micro < $5K < 5M 1-4 < 1K

Small $5K – $25K $5M - $50M 5-99 $1K - $5K

Medium $25K - $100K

$50M - $100M

100-499 $5K - $50K

Large $100K+ $100M+ 500+ $50+

Challenges for Small/Medium Sized Business

• Small firms want to be treated as businesses but often conform more to a retail customer profile

• Costly to serve so tendency is to have a one-size fits all approach

• Take-up of technology likely to be slower than large business sector

• Most are not well-informed consumers of insurance products/services

• Highly price-sensitive

6

Important Learning from past CFIB Surveys…

CFIB members say:•Primary concern is cost •Packages are not tailored to small business needs •Heavily reliant upon insurance brokers •Not being given the full range of options in coverage/cost•Red tape in claims process is burdensome •Very loyal to broker/agent •High satisfaction level with their broker•Need advice on controlling/managing insurance costs •Very satisfied with claims service •Unclear on their rights as a consumer of insurance

7

Helpful Information

8

ORBiT NICC Survey Results

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

What Tools do you need?

“Other” responses:

•Client self-serve quote and bind new business online

•Competitive rates that do not increase annually except for inflation

•Higher commission on smaller accounts. How possibly can a professional brokerage manage a client's expectations for $200 per year in commission. To provide broker services either requires higher commission or less responsibility (perhaps like more of an "agent")

24

25

26

Why aren’t you using the tools you have?

“Other” responses:•Having a clearly defined process for small business•Comprehensive knowledge and coordination of all the various ways that the insurance companies offer tools.•Products are too complex•Service issues @ the company side - small commercial should be quick and easy - staffing issues at the company side often draw the process out•Dealing with too many renewal questionnaires•Delivery of tools to the broker for one touch service•How can a brokerage "commoditize" i.e. have clients DIY when we are held 100% legally accountable for our clients risks? You can't provide "RIBO/Broker" type services (think E&O) on a commoditized/call centre type basis.

27

28

What tools are key to write NEW BUSINESS?

“Other” responses:

•SEMCI is key to future success

•Sales ability and professional counselling to prospects

29

30

Acquiring the Small Business Insurance Customer

“Other” responses:•Companies only offer online broker tools. need to offer online client facing quotes•I may not be aware of the risk appetite

31

32

33

34

What enhancements are needed?

“Other” responses:•Broader risk appetite e.g. consultants, internet sales, etc.

35

36

37

What are clients asking for today?

“Other” responses:•paying monthly with credit card•I do not believe demands of small business owners are changing. I believe the IT world would like us to believe that. I do not know of any business owner who would want to manage their own insurance

38

Survey Conclusions

• Little time to touch their clients after new the sale• Touch points are on administrative issues

• Products do not meet client needs of

• Standard concepts/ techniques for personal lines don’t work for small commercial business

• Better segmentation for new specialized coverages • Liability coverages more popular than property • Need to move away from the package concept

• Need immediate access claims, billing, and policy information

• Product lines have little impact on placement

•

39