4 July 2017 07:00
Maya Raic | Photo : Réjean Meloche
The Chamber of damage insurance offers five tracks of solution in order to protect the public in an environment of insurance sales online 100 % automated.
«We know that by the Internet the sale of insurance is a must. The Internet is synonymous with efficiency and speed in the operations, reduced costs, disintermediation, and automation of some processes. This meets the needs of consumers, » said Maya Raic, president and CEO of the Chamber, in a speech at the insurance Day of damage.
She put emphasis on the fact that it is necessary to transform the industry with an innovative model that takes advantage of new technologies, adding that customers are willing to buy their insurance coverage online. Ms Raic adds that they will turn to non-traditional players like Google, Amazon, Facebook and Apple if the insurers do not offer.
The organisme d’autoréglementation raises issues that intervene in the reform of the industry, which will not be long in arriving. If the lack of knowledge in the area of finance is well documented, a digital literacy and media deficient is a relatively new concept that must be taken into consideration in order to protect the consumer, » said Ms. Raic).
It defines digital literacy as the mastery of digital technologies, for example, knowing how to use the Internet to find what you’re looking for or do online transactions. A study by the ORGANIZATION shows that 45 % of Quebecers believe that they have a level of digital skills is high, while 20 % of them consider themselves to be poorly competent to conclude transactions over the Internet with online payments.
The other hand, media literacy is the ability to discern true from false information, and recognition of the advertisements and to identify credible sources. A report from Stanford University shows that more than eight young Americans in ten don’t know the difference between journalistic content and content that is sponsored by a company that wants to sell something.
«These are the milléniaux who are more likely to engage in the sale of insurance online. We realize that even though they are more educated than previous generations, only 24 % of them have a basic knowledge of financial literacy, » said Ms. Raic).
In a context where selling on the Web is inevitable and where the financial knowledge, digital and media are not totally mastered by the whole of the population, how is it possible to protect it ? «There is no single solution to» how to replace the professional responsibility of the representative while maintaining the same level of protection of the public, said Ms Raic).
This is why the Chamber offers five tracks of solution, stressing that the response will be at the crossroads. First, the board proposes to transfer the responsibility of individuals to businesses, by imposing on them a code of ethics that is universal, taking into account the code of conduct of professionals, as well as to change the operation of the access to the compensation fund for that this includes all means of distribution.
As a second solution, the Chamber recommends to redesign products so that they are drafted in simple and clear language, which could facilitate the understanding. The organization supports the suggestion of theAuthority of the financial markets, which calls for insurers to choose the products that they sell online so that they are adapted to this channel of distribution.
To this effect, Mrs. Raic) indicates that european laws dictate that a company needs to frame products that are adapted to online sales by distribution channel. Furthermore, it should rethink the design of products so that consumers can better compare them, in order to make a choice better informed.
Then, Mrs. Raic intends to analyze the international experiences » in order to understand the risks, observe the reactions of the public, analyze the impact and adjust the legislation «. It reiterates a proposal made to the Authority in 2012 for their consultation on the Internet sales provide for a right of cancellation of 14 days without penalty, in addition to reversing the burden of disclosure of information, which would oblige the distributors to ask specific questions.
Currently, it is necessary for the insured to disclose all circumstances likely to influence the acceptance of risk and pricing, without having the expertise necessary to identify such circumstances. This can be for the insured to omit material facts in good faith, noted the CEO of the Chamber.
Moreover, the Chamber advocates for increased transparency in the face of the complaints and problems faced by consumers, as is the case in England, where the complaints made to the financial services ombudsman are public. Each year, the number of complaints, the products concerned, the rates of resolution, in addition to the 20 products the most problematic are disclosed.
The fourth track of solution puts the representative of the front, and the key role that it plays to «counteract the» informational imbalance «, that is, the difference in understanding between the professionals and the consumers, who do not know much in the question. The Chamber argues that the customers want to have confidence that the insurer will be there in case of need, when a claim, for example, and this trust is built in the development of the relationship, which is built with the professional.
«The consumer that wants to purchase an online insurance, and who believes that it is capable to do so should be able to benefit from the expertise of a professional. The representative must be available at any time of the subscription, it has an added value to analyze needs, provide advice and explanations, to adapt his discourse to the level of understanding of the customer, be proactive, because it goes to their needs, » pleads Mrs. Raic).
Finally, the Chamber advocates a hybrid model as a win-win solution, which combines the advantages of a robot and an algorithm to those of a professional. Ms Raic cites that, globally, seven in ten consumers say they are willing to use a robot-adviser for their protections insurance. However, two consumers on three still wish to interact with a human.
This mixed-model meets the needs of having multiple channels of distribution of products and the issue of the lack of literacy, » says Ms Raic). «The winning strategy combines the skills and duties of a certified professional, with the advantages of the technology. Remove the professional from the equation is the removal of one link in the chain of protection of the public. For us, it is necessarily a priority issue, » she said.