Call for Help

Responding to the ubiquitous consumer expectation that financial services must be available to consumers 24/7, the insurance industry is increasingly making use of the call centre model for delivering policies and advice to policyholders.

In doing so, the industry is following a much broader social trend. Figures are wildly unreliable, but Canada’s call centre industry has no doubt boomed since six years ago, when estimates suggest there were anywhere between 4,500 and 13,400 call centre operations in Canada, employing between 210,000 and 570,000 workers (depending upon which sources you believe).

Various advantages to call centres include:

• cost savings (because a third-party is assuming the costs associated with operating the centre);

• more readily available — and presumably therefore improved — customer service;

• increased customer retention; and

• increased sales and revenues.

Be that as it may, some interesting wrinkles are associated with this model in the context of selling insurance products.

One major question, not necessarily specific to the insurance industry, has to do with the quality of advice policyholders receive over the phone. For example, most consumers have a story of frustration to share about some call centre employee who seemingly tried to stonewall them, or provided (at best) uneven or inconsistent advice. It’s not surprising that a YouGov.com online survey in the United Kingdom found that only 4% of its respondents reported having a good experience when dealing with a call centre.

A recent RIBO decision implies jurisdiction is still very much a live issue when it comes to licensing call centre employees

In fact, insurance brokers point to this as an advantage they have over direct writers (which often use call centres), because, as brokers note, getting good advice is a cornerstone of the insurance product.

Another wrinkle is the location of these call centres. Jokes abound about getting help for your computer, bought and broken in Canada, from call centre employees based somewhere overseas. But call centre locations are proving not to be a joke when it comes to dispensing advice about insurance products in Canada.

Last year, one insurer operating in Ontario was fined Cdn$5,000 by the province’s broker regulator because the company’s call centre, based outside of the province, was dispensing advice about insurance to Ontario consumers. The call centre employees in question were not registered with the regulator to provide advice to Ontario consumers, a Registered Insurance Brokers of Ontario (RIBO) disciplinary panel found.

The RIBO decision implies jurisdiction is still very much a live issue when it comes to licensing the call centre employees. While the physical location of the call centre may not matter, the licensing jurisdiction still does, making staffing of these call centres potentially more costly to establish and manage. What one hand giveth, the other taketh away….

The upshot of all of this is that while call centres certainly do allow insurers and brokers to sell their products more efficiently and economically, there are serious issues to consider about the quality and consistency of their service — to say nothing of the thorny regulatory and licensing/jurisdictional issues their structures entail.

An insurance industry attempting to deliver optimal service to consumers should be wary of the double-edged nature of this service delivery method.