Wawanesa tells brokers it plans to explore a direct-to-consumer offering

What exactly do the words “exploring a direct-to-consumer offering” mean?

It’s a question on the minds of many Canadian brokers who received a Mar. 4 letter from Wawanesa.

“In the spirit of openness,” the letter says, Wawanesa — which for years has sold its products solely through the broker channel — is advising of its plan to broaden its distribution model.

“Our broker partners are integral to our long-term success,” says the letter, a copy of which was obtained by Canadian Underwriter. “We don’t see that changing. Wawanesa remains invested in the broker network and growth within this channel continues to be a primary pillar of our corporate strategy.”

The letter goes on to say Canadians’ preferences around buying insurance are changing and some of Wawanesa’s competitors offer direct-purchase options. As such, the letter says the company needs to “keep pace to remain competitive,” describes work on the direct offering as “in the early stages,” and adds there are “no concrete details to share.”

It also says the move is needed to connect with customers who already buy direct.

“As a principle, any future direct-to-consumer offering would be marketed under a different brand,” the letter concludes. “This work does not change our commitment to the broker network. We value your partnership and we’ll continue to communicate openly as we progress on our direct-to-consumer journey.”

Digital channel development by Wawanesa appears to be at the exploration stage, says a western Ontario broker, adding he’s heard the same assessment from industry peers.

“This is one of those times where transparency might have caused more trouble than it’s worth,” the broker tells CU. While he appreciates Wawanesa is being forthcoming, he says in this case that strategy has led to “some grief.”

A greater Toronto area (GTA) broker tells CU he’s heard Wawanesa is “in the process of setting up the direct channel for personal lines,” but that no launch date has been set – making him think it won’t appear until 2027. Although it’s unclear what a digital offering might ultimately look like, he says he pictures something along the lines of “a Sonnet- or Belair-lite” model.

Business rationale

Speaking to that speculation, Wawanesa’s president and CEO Evan Johnston, stresses to Canadian Underwriter the direct model remains a work in progress. “I recognize that people have a lot of questions about the detail, and unfortunately, the answer is we don’t have the detail yet,” he says.

He adds the offering would be aimed at customers who already buy their personal lines policies online, as well as those with simpler coverage needs who might otherwise forgo insurance.

“We want…to provide an alternative offering to that customer,” he says, adding there’s no intention to compete with brokers. “I believe that the right way to buy insurance…is through an independent broker. Full stop. However, there’s a component of the population that feels different or has different needs.”

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In that light, he says, exploring a direct channel is necessary ensure the company’s long-term profitability and sustainability, and to compete with certain major players in Canada’s insurance marketplace.

“Ignoring this portion of the market would be negligent,” he tells CU.

Editor’s Note: This is the first of a two-part series. The story above describes what we know about the plan thus far, and the second part will present broker reactions to the plan.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.