Changes in consumers’ behaviour have transformed the market in recent years. The insurance sector has been no exception as traditions have been turned upside down. Strategic changes have thus become inevitable for insurance firms seeking to remain viable and grow. To that end, options such as diversification and specialization may be considered. We put the question to a group of business development professionals and brokers who have all embraced reinvention.
UPSTREAM REFLECTION
For Marc-André Routhier, an RCCAQ training centre collaborator, business development consultant and founding president of Imasun, gaining an understanding of the current market and clients’ needs is essential. “Before you head towards specialization or diversification, the first question you should ask is: am I able to create value for the market and meet its needs? If you don’t understand the market’s needs, you won’t be able to create value and will thus be unable to develop,” explains Routhier. Before undertaking an in-depth analysis of the sector and your business model, you would do well to redefine your client commitment. In Routhier’s view, regardless of the option selected (e.g. diversification or specialization), you need to know how to deftly manage the change phase while remaining focused on your clients’ needs. “For any type of change, you have to be rigorous. You don’t want to ask stakeholders if they would be willing to embrace change. Simply say to them: here’s the client and this is what he wants. In order to change, you must work together,” notes Routhier.
THE IMPORTANCE OF STANDING OUT
For Jacques Nantel, Ph.D., a professor at HEC Montreal and Executive Vice-President of Consumer strategy and Head of Market Intelligence at Léger Marketing, there is no doubt that specialization will play a key role in the insurance industry in the future. Citing the situation of travel agencies faced with the advent of online com-petition several years ago, Prof. Nantel believes that insurance firms should modify and update their business models as a matter of urgency, while regarding specialization as a potential avenue of growth. “The market has undergone major structural changes in recent years. Consumers are better informed. Still, they’re not differentiating as much between insurance products and they’re increasingly using technology to obtain information. For those reasons, brokers must seek to set themselves apart from the rest.” Establishing a position in smaller niche markets would appear to be a good choice. “In the end, your volume will be lower but your profit margin will be higher,” says Prof. Nantel.
EXPLORING NEW SECTORS
In a bid to bring in more clients, Roberval-based Taillon Assurances decided to test the market a few years ago. Although it continued to sell general insurance products, it enhanced its appeal by developing new programs such as aviation insurance and insurance for renewable energy companies. For insurance broker Serge Taillon (the firm’s Vice-President and shareholder), it is clear that developing unusual niche markets presents certain challenges. Prospecting for new sectors and becoming known are priority issues for which there is no ready-made solution. For instance, “our search engine optimization efforts brought us good results for products like maritime insurance. In contrast with our aviation insurance program, our online advertising proved less successful. One of the reasons is that even though there is not much competition, the well-established companies in this area are a natural choice for clients. That means that we have to find other solutions. Insurance for renewable energy companies is a more marginal niche market, with negligible volume. But in our operations across Quebec, we’ve signed up some lucrative accounts at very little expense,” notes Taillon. Whatever solutions that brokers may be considering, one rule remains when moving into new sectors: “If you want to enjoy your work and ultimately progress, you need to find a niche market you like.”
PERFORMING WELL IN ONE SECTOR INSTEAD OF SCRAPING BY IN SEVERAL
In a bid to reinvent his firm, Michel Drouin, an insurance broker and President of Charlebois Trépanier, initially decided to embrace diversification. “We’d experimented by offering products in some 15 different sectors but the results weren’t convincing. As the saying goes, you can’t be good at everything. So we withdrew from certain sectors and focused on separate profit centres with services for specialty areas such as insurance for high-value homes,” he explains. This change of course proved lucrative for the firm, which grew due to an ongoing increase in the number of clients it serves. “By aiming to be the best in our sector, we found new clients and we continue to do so,” notes Drouin.
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