© CGI Group Inc. CONFIDENTIAL

NICC 2014 Small Commercial Broker Survey

CGISeptember 2014

About NICC• What is it?

• Who attends?

• The purpose of the panel

• Survey of ORBiT members/non-members open July to August 30, 2014

• 55 respondents took part in the survey

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CFIB Shares Member Feedback on Insurance

About CFIB:•Non-partisan advocacy organization representing privately-owned Canadian businesses •109,000 members in all industry sectors•50% have < 20 employees; 80% have <5 employees

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Small Business Sector in Canada

• Make up 50% of the Canadian economy in terms of GDP and employment

• Create 50 – 75 % of total net new jobs• Represents a larger proportion of the economy than in

U.S. and other developed countries• Churn at a rate of 30-60% every 5 years • Almost 50% of jobs created in next 15 years will be from

businesses not yet started • <1% of businesses are fast growing • High growth firms are more common in low and medium

tech sectors • Entrepreneurial sweet spot are ages 45-65

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The Market Stratification Challenge in Canada

Which metric do we use to define the strata?

Sources

Note 1: Industry Canada

Other: Premium, Sales and Broker revenue stratification is based on experience in the Canadian commercial marketplace.

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Canada Premium Sales Employee Size

Broker Revenue

Micro < $5K < 5M 1-4 < 1K

Small $5K – $25K $5M - $50M 5-99 $1K - $5K

Medium $25K - $100K

$50M - $100M

100-499 $5K - $50K

Large $100K+ $100M+ 500+ $50+

Challenges for Small/Medium Sized Business

• Small firms want to be treated as businesses but often conform more to a retail customer profile

• Costly to serve so tendency is to have a one-size fits all approach

• Take-up of technology likely to be slower than large business sector

• Most are not well-informed consumers of insurance products/services

• Highly price-sensitive

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Important Learning from past CFIB Surveys…

CFIB members say:•Primary concern is cost •Packages are not tailored to small business needs •Heavily reliant upon insurance brokers •Not being given the full range of options in coverage/cost•Red tape in claims process is burdensome •Very loyal to broker/agent •High satisfaction level with their broker•Need advice on controlling/managing insurance costs •Very satisfied with claims service •Unclear on their rights as a consumer of insurance

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Helpful Information

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ORBiT NICC Survey Results

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What Tools do you need?

“Other” responses:

•Client self-serve quote and bind new business online

•Competitive rates that do not increase annually except for inflation

•Higher commission on smaller accounts. How possibly can a professional brokerage manage a client's expectations for $200 per year in commission. To provide broker services either requires higher commission or less responsibility (perhaps like more of an "agent")

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Why aren’t you using the tools you have?

“Other” responses:•Having a clearly defined process for small business•Comprehensive knowledge and coordination of all the various ways that the insurance companies offer tools.•Products are too complex•Service issues @ the company side - small commercial should be quick and easy - staffing issues at the company side often draw the process out•Dealing with too many renewal questionnaires•Delivery of tools to the broker for one touch service•How can a brokerage "commoditize" i.e. have clients DIY when we are held 100% legally accountable for our clients risks? You can't provide "RIBO/Broker" type services (think E&O) on a commoditized/call centre type basis.

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What tools are key to write NEW BUSINESS?

“Other” responses:

•SEMCI is key to future success

•Sales ability and professional counselling to prospects

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Acquiring the Small Business Insurance Customer

“Other” responses:•Companies only offer online broker tools. need to offer online client facing quotes•I may not be aware of the risk appetite

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What enhancements are needed?

“Other” responses:•Broader risk appetite e.g. consultants, internet sales, etc.

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What are clients asking for today?

“Other” responses:•paying monthly with credit card•I do not believe demands of small business owners are changing. I believe the IT world would like us to believe that. I do not know of any business owner who would want to manage their own insurance

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Survey Conclusions

• Little time to touch their clients after new the sale• Touch points are on administrative issues

• Products do not meet client needs of

• Standard concepts/ techniques for personal lines don’t work for small commercial business

• Better segmentation for new specialized coverages • Liability coverages more popular than property • Need to move away from the package concept

• Need immediate access claims, billing, and policy information

• Product lines have little impact on placement

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