What can the ‘novel’ direct access model way of selling insurance offer?

What can the ‘novel’ direct access model way of selling insurance offer? | Insurance Business Canada

Technology

What can the ‘novel’ direct access model way of selling insurance offer?

Regulator’s director of innovation shares hopes for agent testing

Technology

By
David Saric

In Ontario, a new way to sell insurance is undergoing testing to see how it can offer consumers more choices when shopping for coverage, according to a recent Financial Services Regulatory Authority of Ontario (FSRA) announcement.

The direct access model is a proposed method where licensed general agents will be allowed to sell multiple commercial insurance policies of behalf of participating carriers, Stephanie Appave, FSRA director of innovation policy, told Insurance Business.

“It will create a wider suite of commercial insurance products with the goal of allowing consumers’ needs to be better met,” Appave said.

Under the Insurance Act, an agent is only able to sell one insurer’s product. However, it is hoped that allowing them to sell multiple insurers’ products, under the supervision of a common managing agent and with the caveat that entities supporting the model are in an ‘affiliated group of insurers’, could create a better experience for consumers.

In an interview with Insurance Business, Appave spoke about how the direct access model is moving through its testing phase and why consumer involvement is paramount for new ideas.

Finding new ways to sell commercial insurance

As a regulatory body, the FSRA wants to create a space where insurers who have novel ideas that can improve or refine certain elements of the industry are given a chance to experiment, according to Appave.

Within a test and learn environment, these proposed ideas can be examined more closely to see how they might impact the “marketplace, other businesses, consumers, and mitigate any unintended risks to consumers,” Appave said.

Sometimes, insurers may seek out guidance from a third-party organization to see how their ideas may be stalled by regulatory or legislative barriers.

For the direct access model, which is entering its next phase of testing, the FSRA will be monitoring its impact on the industry. It will also manage and mitigate any expected risks or validating its proposed benefits.

“This process is four years in duration and we will be monitoring closely the results as that test progress,” Appave said.

Additionally, Appave was quick to note that the direct access model will be significantly refined to only include commercial insurance products for a more streamlined selling experience.

“The insurance space is so huge,” she noted. “This particular testing is that it is about a specific suite of commercial insurance products, versus sort of that broader landscape of products that fall under the banner of like life insurance, or health insurance.”

The direct access model is the first idea to be undergo the layered approval process since the FSRA launched its Innovation Office in 2020, with testing and learning environments having been established in 2022.

“Hopefully we have different innovators come talk to us about their idea and give them a space to test it out,” Appave said.

Listening to consumer concerns

Insurance professionals have contact with their clients and can gain insight on their specific needs and concerns.

With this information, a carrier or other insurance company can go to FSRA to find a space to test out their proposed idea on how to improve the customer experience.

While innovation has the potential to drive the industry forward and create new ways to meet client and market demands, the safety of the consumer must always remain paramount throughout any testing process, according to Appave.

“There must be no harm to consumers throughout the testing process or when this new idea is available on the market,” she said.

This also includes consumer participants within the study, who, as Appave noted, will be notified of their participation in an experimental case study to keep a more transparent testing phase.

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