Co-operators take on Quebec for the second time

It’s no secret that Quebec likes to do things on its own, and that goes for the insurance industry as well. Going against the grain often produces results, but it can cause some major headaches too.

In Quebec, individual life insurance is sold primarily through managing general agencies, while the rest of the country uses a combination of direct distribution and MGAs. So when The Co-operators tried to penetrate the Quebec market in the spring of 2006, it adopted the MGA model — a departure from the firm’s direct distribution model.

It hit a brick wall.

“It wasn’t as successful as we’d hoped for,” says Leonard Sharman, a spokesman for the Guelph, Ont.-based company. “We’ve been in Quebec for quite a while but haven’t really got a foothold in the province.”

So the company “stepped back” last June, suspending its marketing campaign in order to reassess its distribution strategy. “We considered how to fix the problem and how to penetrate the market,” explains Sharman.

After a couple months of discussion, the company announced Wednesday that it was returning to the Quebec marketplace. So what’s The Co-operators’ new distribution model? The same as it uses everywhere else.

“We’re introducing agents in Quebec and remarketing individual life and other products,” says Sharman. “It’s worked great in the rest of the provinces, and we believe it’ll work in Quebec as well.”

Heading up The Co-operators’ Quebec office will be the company’s senior vice-president, Martin-Eric Tremblay. The new president will be tasked with implementing a growth strategy for not only The Co-operators but also its successful Quebec subsidiaries. He’s also expected to increase sales through the company’s broker network and introduce insurance agents into the province.

Sharman says the company’s overall strategy is “to grow the business through brokers and through direct distribution, which would include our agents, or buying over the phone and the Internet.”

Even with the new distribution model, Sharman doesn’t expect that The Co-operators will suddenly thrive in Quebec. He admits that it’ll take time to build the brand.

The Co-operators is not exactly a typical life and health carrier, as it offers property and casualty insurance products as well — in fact, that’s the firm’s bread and butter.

Still, the company is confident that it can tackle the challenges that come with this unusual marketplace. “In their distribution model they use MGAs, and on the auto side, they have a unique kind of partially private and partially public offering,” says Sharman. “It demands a unique approach.”

While The Co-operators’ foray into Quebec is easily its biggest current venture, it’s also introducing a new project in Alberta. The company has set up an insurance and risk management division to deal specifically with non-profits and volunteer organizations.

Sharman says the needs of non-profits are different than those of commercial enterprises. Usually, a volunteer organization is small and lacks the cash to defend itself against a multi-million-dollar lawsuit. The Co-operators plans to provide resources and appropriate risk coverage to help these groups deal with unforeseen events.

Right now, the project, dubbed the “Community Guard,” is just in its pilot stage. Agents in Alberta are being trained on how to properly assess risk and to determine what plan is best to alleviate that risk. “We’re working with non-profits in a new and direct way to mitigate those risks as much as they can and make sure they’re getting the insurance protection they need.”

While this might not sound like the most lucrative venture, The Co-operators sees an underserved market, one where it can still make money and help communities too.

“It really comes down to values,” says Sharman. “We have about 600 offices across Canada, so our agents are very connected to community. They hear these concerns on the ground when there are problems. As a co-operative organization, we’re committed to making a profit but also to helping out and improving the quality of life for everyone in Canada.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com

(09/10/07)

Bryan Borzykowski