A new business model that changed the course of history
In 1987, Desjardins launched direct insurance via its caisse network and by phone—an ambitious and necessary initiative to turn around an industry that was experiencing major financial difficulties.
Desjardins had been selling general insurance products through a brokerage network since 1945, but in the 1980s, the cooperative took the bold step of changing its property and casualty insurance business model by making insurance available directly through its caisse network and call centres.
“Caisses weren’t very enthusiastic at first. You have to remember that our property and casualty insurance business wasn’t exactly flourishing at the time, and that we came within an inch of shutting it down altogether. But we were able to convince them that by changing our business model, we would all come out winners. In less than a year, over 200 caisses had an in-house insurance agent,” notes Sylvie Paquette, President and COO of Desjardins General Insurance Group.
An industry turned on its head
The initiative, dubbed the “insurance war” by the media, was one of the most controversial developments to hit the industry. Not only did it revolutionize Desjardins caisses, but it also marked an incursion into what was traditionally brokerage network territory. Desjardins had to plead its case in court to retain the right to distribute direct property and casualty insurance.
“It was a major project that forced us to think outside the box, which isn’t always easy. But when we look at how far we’ve come since 1987, we’re glad we took the gamble. We currently have over two million insurance policies in force and we’re proud of that!” adds Ms. Paquette.
In offering direct insurance to its members and clients, Desjardins set high customer service standards that are now industry standards. “We had to be irreproachable to convince our clients of the benefits of direct insurance. So we offered them our full support, from quotes to claims. In addition to being present in caisses, we set up call centres with extended business hours and 24/7 claims service,” explains Ms. Paquette.
Today, 25 years later, Desjardins General Insurance is pleased with its track record. Its market share in Québec has grown considerably from a paltry 0.4% in 1987 to nearly 20% in 2012. In short, Desjardins acted as a catalyst by setting the pace for the industry. Its success led to the expansion of other direct insurers and prompted banks to follow suit. The upshot is that Québec’s direct insurers now account for 60% of the personal lines insurance market.