Ontario brokers’ biggest source of competition

Although Ontario’s broker distribution market share has slightly increased year-over-year, the direct-to-consumer (D2C) distribution channel is becoming more competitive, an expert broker shared at the Young Brokers Conference in Niagara Falls. 

Ontario brokers should expect to feel more pressure from the D2C model as it bypasses the market share of direct insurance agents, particularly in the small business commercial space, Insurance Brokers Association of Ontario (IBAO) president Suzanne Pountney cautioned.

Overall, approximately 95% of all commercial insurance products continue to be distributed through brokers — a line brokers have continued to dominate year-over-year, said Pountney.

But while Ontario brokers continues to dominate the market, especially in commercial products, direct writers are looking to gain an advantage. In particular, D2C insurers began bringing competition to the small-business space earlier this year.  

“It’s reasonable to expect that this move will move the needle away from broker distribution, as the large insurer[s] market their products to this new audience,” said Pountney. “However, brokers should feel confident in their ability to remain extraordinarily competitive in this space, with a value proposition closely aligned to the needs of the majority of business owners.” 

Broker Market Share

Overall, Ontario’s broker force numbers 16,225 this year, an 8% increase from 2022, per IBAO records. This includes 13,839 licensed brokers and 2,386 unlicensed brokerage staff.  

Total direct premiums written (DPW) by Ontario’s broker force accounted for 64.01% of the market share in 2022 Q4. This is a slight increase of the broker market share from 2021 (63.99%), 2020 (62.92%) and 2019 (62.36%). 

“IBAO is not seeing dramatic changes with respect to broker distribution and market share in Ontario,” Pountney said. “[Brokers] are all holding the line really well, and consumers do want to work with brokers.” 

But for the main business lines, (personal and commercial auto and home), the 2022 broker DPW numbers are slightly lower than 2021. 

For example, for brokers, commercial property DPW represented a 93.36% market share in 2022, compared to 93.49% in 2021. Brokers had a commercial auto DPW market share of 88.88% in 2022 but 89.02% in 2021. Personal auto and property show a similar trend.  

An increase in total DPW but a decrease of DPW in the main lines of business suggests the market is seeing higher DPW elsewhere, Pountney explained. 

“This suggests that some or all lines of business that aren’t included [in the main lines of business] — like commercial liability, commercial specialty, surety, marine — all of those were higher in 2022 versus 2021, to balance out the overall average,” she said. “This makes the overall broker market share based on direct written premium in 2022 higher than the prior year.” 

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