by Grant Yoxon
Get quotes online
Alternative Risk Services
Quote online, notification by e-mail
Insurance Brokers Association of Ontario
Vector Insurance network
Many local brokers also offer online quotes. Check Automotive Services in your community.
Understanding car insurance
Many of the companies listed above provide useful information about car insurance. Vector’s online quote form, for example, provides hotlinks to definitions of all terms used on their form. For more information see:
Autos’s own guide to keeping insurance costs down.
Financial Services Commission of Ontario
Insurance Bureau of Canada
You can shop car insurance online, compare rates, even buy a policy online. But would you really want to?
In most household budgets, the cost of driving comes second only to mortgage or rent payments. We look for the best deal on a new car, bargain hard over the value of our trade-in, question the cost of repairs and drive around town looking for the best price on gasoline.
But when shopping for better insurance rates, many of us give up even though premiums can add thousands to the cost of a car over its lifetime.
Too complicated, we say. Who has time to find a better price.
Until recently insurance shopping has been a daunting task, requiring dozens of phone calls and lengthy conversations discussing a subject few of us really understand.
But the Internet has the potential to change all this. Today consumers can shop car insurance on-line, compare rates between insurance companies and brokers, and in some cases even buy a policy on-line.
And if terms such as “comprehensive” and “all-perils” have you looking for your dictionary, the Net has infomration sources bring your knowledge of insurance-speak up to conversational levels.
With knowledge and pricing information consumers should, in theory, be able to find the best insurance product for their needs and at the best price available.
However, buying car insurance is a lot like buying a new car – there are many different models and optional extras to consider before signing on the dotted line. The sheer variety and volume of insurance offerings makes comparisons difficult. Knowledge and a good spread sheet program will make the task much easier.
IBM’s Doug Grant is an electronic business expert who has worked with the insurance industry for over thirty years. “Everybody’s product is a little bit different and some things are included and some aren’t and you’d have to build quite a matrix to optimize your feature comparisons and put a price to them.”
Even though Mr. Grant helps insurance companies, brokers and agents to make the best use of the Internet, he is realistic about the usefulness of the medium for comparison shopping.
“It’s not a nice clean simple way of comparing different insurance products and coming up with an answer that, at the end of the day says, �Here’s 19 different insurance products I’ve looked at. This one’s got the best features. This ones got the best price.’
“It’s not nice and neat because of the complexity.”
Buying auto insurance on the Internet is not like buying books or CDs. If you’re looking for Robert Ludlum’s latest book and you go to six book stores and one is two dollars cheaper than all the others, you’re probably going to buy from the store with the lowest price. With insurance, says Mr. Grant, “I’m not sure I’m even getting the same book. And I’m not sure it’s even got Robert Ludlum on the cover.”
The complexity of the product is the primary reason why both the insurance industry and consumers have taken a cautious approach to conducting business over the Internet.
IVANS Inc., an electronic communications services provider to insurance and health care companies in the United States and Canada, regularly surveys the Internet market for the insurance industry. A U.S. study conducted earlier this year found more than 50% of Internet users interested in banking online and 44% interested in purchasing consumer goods such as CDs and books. For home insurance and auto insurance purchases, the figures dropped to 27% of all Internet users.
And while many insurance companies and brokers are moving to the Internet to market their products, few are actually selling insurance online.
But on Belair-direct you can fill out an online quote form and once satisfied with the rate, proceed to purchase the policy online. Belair is owned by ING, the Dutch banking and insurance giant and sells insurance online in Ontario, Quebec and New Brunswick.
Robert Kan, regional manager for Ontario says Belair-direct was the first insurance company to introduce a fully electronic transaction. “This is an important development,” he said, “because with this approach Belair-direct and some of our competitors are simplifying the insurance product, which is perceived as complex.”
By selling directly to consumers, Belair eliminates the traditional insurance middleman, the broker.
Others selling directly through the Internet, toll-free phone numbers or both include the Vector Insurance Network, Alternative Risk Services and CIBC. Vector is available to residents of Alberta, Ontario, New Brunswick and Nova Scotia, while CIBC online quotes are currently available in Ontario and Alberta. At this time, Alternative Risk Services’ online quote is valid only for residents of Ontario.
While you can obtain a quote from these companies over the Internet, the actual transaction takes place after talking to an agent or representative of the firm.
Even Alternative Risk Services, which markets insurance exclusively on the Internet through i-money, the Canadian personal financial mega-site, closes the deal by phone. And Belair-direct invites customers to meet an agent if they need information that cannot be given over the phone or by e-mail.
There are good reasons why you should talk to a company representative. You want to make sure you’ve got the right coverage for your needs. You don’t want unnecessary insurance like collision or comprehensive on a vehicle that is old or in bad shape.
You might also be eligible for discounts not considered in the original request for a quote. For example, many firms offer substantial discounts to customers who insure both their home and car with the same firm.
Threatened by the direct sellers, insurance brokers are fighting back, with many launching World Wide Web sites to offer online quotes, or joining forces in industry-sponsored efforts like InsureXplorer to give consumers an online alternative to the direct seller.
The Insurance Brokers Association of Ontario teamed up with Cebra Inc., a subsidiary of the Bank of Montreal, to launch InsureXplorer in August 1997.
“What we do is facilitate a way for people to get information about insurance,” said Denny Allen, public affairs manager with Cebra. “We’re not an insurer per se. We are the engine that puts people in touch with various brokers. That’s what InsureXplorer allows people to do.”
Not all independent insurance brokers subscribe to the service, but currently 350 Ontario brokers are participating. The estimates are based on information provided by 35 insurance companies.
For the most part, insurance companies only sell insurance through accredited brokers. Exceptions include Belairdirect, Allstate, State Farm and the Cooperators who sell insurance through company agents.
Brokers are independents who represent a variety of insurance companies. They advise consumers, determine the customer’s needs and locate the best – and lowest cost – insurance package to meet those needs.
Visitors to InsureXplorer select an estimate they’re interested in and review a selection of independent brokers who do business in their area – or the system will randomly assign a broker to the request. The broker will contact the client within two business days and the insurance transaction takes place over the phone or at the broker’s offices.
Ottawa broker Rhodes & Williams Ltd. participated in the InsureXplorer service until this summer. Account executive Kristy Young said Rhodes & Williams received few referrals from InsureXplorer and that the quotes people did receive were inaccurate.
“The premiums they quoted for the companies were not accurate. So I had to re-quote them and I don’t think we had one sale through InsureXplorer.”
This summer Rhodes & Williams set up its own online quote system. Clients provide information about their car and their driving record on-line, and the quote is returned by phone, usually the same day.
Experience with the new system has been good. “I probably do, on average, two or three (online quotes) a day,” said Ms. Young. “It’s way more than we ever thought.”
The inaccuracy of the InsureXplorer quotes is not unusual. Car insurance is a complex product affected by many factors, including the specific model of car you drive, your driving record, the amount of coverage you need and any optional extras you require.
Differences in the way insurance companies treat such factors as driver training and the installation of anti theft devices and how they define pleasure driving as opposed to commuting can also result in online quotes that differ considerably from what you will actually pay.
But the availability of insurance quotes online has important benefits for consumers. It allows you to survey the market and get at least a rough estimate of what your insurance costs might be.
For anyone considering buying a new car, finding out how the new purchase will affect your insurance rates and the cost over the long term ownership of the car are important factors to consider before making a deal. Online insurance quotes allow you to check these costs without a lot of hassle, although your insurance broker will also provide this information readily.
More important though, the availability of quotes online will eventually improve competition in the insurance marketplace. “If you’re giving the customer access to perfect knowledge then you can’t be out of line on pricing,” said Mr. Grant. And a competitive insurance industry can only be a good thing for consumers.
Grant Yoxon is an automotive writer and editor of Autos. This article first appeared in the Ottawa Citizen, November 20, 1998.