Combining P&C with other financial products helps improve margins: NICC speakers

OTTAWA – Combining property and casualty insurance with other financial products helps improve both customer retention and margins, speakers suggested Monday at the National Insurance Conference of Canada in Ottawa.

“We just bought State Farm,” noted Stephane Morency, senior vice president of development and commercial lines at Desjardins General Insurance Group, in reference to Desjardins Group’s agreement to acquire the Canadian operations of State Farm.

“State Farm is mainly a P&C network, but there is also the term life, and savings products and … other stuff. Brokers can do the same, so I think this is something that is good for retention, it’s good for the margins, it’s good for the customer because he has a one-stop shop.”

Morency made his remarks at a panel discussion at NICC, in response to a question from the moderator, George Cooke, president of Martello Associates Consulting and former CEO of The Dominion of Canada General Insurance Company.

“There is the notion, that I don’t think has yet been successfully achieved by anyone in Canada, and that is the combination of the P&C products, through distribution, with other products,” Cooke said. “The obvious one is other financial products, which might have serious implications in terms of the competitive landscape.”

Desjardins has said it expects its State Farm Canada acquisition — announced Jan. 14, 2014 — will close in January 2015. Before the acquisition announcement, DGIG was already providing auto, property, pet, motorcycle and recreational vehicle coverage in Ontario, Alberta and Quebec.

Desjardins Group’s other services include personal and business banking, a full services brokerage, mutual funds and mortgages. It also owns Western Financial Group Inc. of High River, Alta., whose operations include a network of brokerages in Western Canada.

DGIG’s acquisition includes State Farm Canada’s P&C, life insurance, mutual fund, loan and living benefits businesses.

Last January, Cooke described the State Farm Canada acquisition as “a play of some kind around combining financial services types of products into one distribution model.”

“If somebody had asked me month ago what I thought the chances were of Desjardins buying the Canadian assets of State Farm, I personally would have said ‘There’s no chance at all,'” Cooke said in January at AudaVision, a seminar held in Toronto by auto claims technology vendor AudaTex.

On Monday at NICC, Cooke asked the panelists, in general, about the combination of p&c insurance with other financial products.

“A good chuck of brokers — in excess of 45%, I believe, in Ontario —  also offer life products and disability products within their branches,” said Randy Carroll, CEO of the Insurance Brokers Association of Ontario. “I don’t see it as changing that much. I still think it’s going to be something that needs to be available to consumers so you do have that opportunity for one-stop shopping if you want it.”

Combing P&C with other financial products can be a “win-win” for both consumers and for those selling insurance, suggested Vincent Vandendael, director of international markets for Lloyd’s.

“Insurers do know that the more products they have with the same customer, the higher the retention rate is,” Vandendael said.

NICC, produced by MSA Research Inc. continues in downtown Ottawa through Tuesday.