Insurance industry must do better job of evolving with customer demands
September 23, 2011
TORONTO, Ont - Canada's trucking insurance industry, besieged by slumping underwriting margins and low investment yields while forced to cover the cost of rising cargo theft, needs to evolve by looking from the outside in rather than from...
TORONTO, Ont – Canada’s trucking insurance industry, besieged by slumping underwriting margins and low investment yields while forced to cover the cost of rising cargo theft, needs to evolve by looking from the outside in rather than from the inside out, Sylvie Wright, president and CEO of Northbridge Financial, told the 25th Annual Transportation Conference yesterday.
“The industry must evolve with its customers. Customers are better informed and have higher expectations of us. They want greater access to information and want it faster, ” Wright told the well-attended conference.
She pointed to the changing buying patterns as one strong indicator of the changes her industry must grapple with. Wright, recently risen to the helm of Northbridge, parent company of well-known Markel Insurance, said 30% of insurance today is bought online. In the Quebec market it’s as high as 50%.
At the same time, the number of insurance brokers has declined significantly. Whereas in the US there used to be 39,000 insurance brokers in 2000, there are only 19,000 today and it’s expected there will be just 17,000 by 2015. Wright did not provide Canadian figures but said the trend is similar here.
Wright said the Canadian insurance industry has about 100 companies vying for position but consolidation is a trend that will continue. Back in 1995 the top 10 insurance groups controlled 51% of the market. By 2005 it was 56% and today it’s 62%. She believes the four largest insurance groups will eventually come to control 60% of the market.
Wright also laid out what she believes will be the keys to success in the future.
1. Invest in technology. Wright said the insurance industry is so far behind the banking sector in investing in technology it is quite concerning. “But consolidation is providing the scale and the capital to invest in technology and go beyond our legacy systems,” she said.
2. Concentrate on customer loyalty: If you are not easy to deal with and responsive to customer needs you will lose customers, Wright said. She added that research shows that companies require an “excellent” customer satisfaction rate to achieve customer retention. “Basically, good is not good enough,” she said.
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