With Large marketing investment, Sonnet still Trying to break into competitive insurance market

Posted by on October 4, 2017

Sonnet started into the Canadian insurance market with an ad that wasn’t about insurance, just. It was about “optimism,” and featured a logo for the Facebook era: a rocket shaped like a giant thumbs-up. 1 year on, the unique brand marketing insurance to tech-savvy Canadians hasn’t exactly hit the stratosphere.

Sonnet, a division of Waterloo, Ont.-based Economical Group, now has over 30,000 customers here, which is still barely a blip in Canada’s property and casualty insurance marketplace where $53.4-billion in direct written premiums were collected on insurance on homes, cars and businesses this past year.

Building a brand is expected to be a slow process, especially in a market where Sonnet is just competing for the half of customers that would like to purchase insurance directly without a broker — and in which, based on Sonnet’s client research, 70 percent of individuals auto-renew their insurance, although 75 percent are not happy with their provider.

“It is not a huge pool, always, that you are pulling out of,” said John Rocco, vice-president of advertising at Sonnet. “I look at these numbers, and it tells me we’re taking a disproportionate share of the available market{}”

Sonnet is trying to capitalize on customer habits it’s seen grow everywhere: While the likes of Geico Corp., Allstate Corp. and Progressive Corp. have made electronic self-serve a standard in insurance purchasing in the U.S. market, Canada has lagged behind. Though some of the biggest players, such as Intact Financial Corp.’s Belair Direct brand, have built up extensive online platforms to sell insurance directly to customers, the typical procedure involves connecting with customers by telephone before a policy is issued. Speaking to a human is not essential to be a Sonnet customer.

Sonnet is coming off a year of “significant” advertising investment to kickstart that strategy, and it has assembled a team of entrepreneurs recruited from businesses in the retail, retail, hospitality and cosmetics industries. A series of advertisements has tried to put a friendlier face on a market that’s fundamentally built around people’s fears that something could go horribly wrong. Sonnet’s marketing targets life moments, such as Or and some subjective situations like the rocket or riding a fake (Because, optimism.)

Shifting customer perceptions of what to expect from an insurer has proved difficult.

“The inertia is strong,” Mr. Rocco said, adding that customers are very “apathetic” about buying insurance or switching suppliers.

Competition moving into its second year will probably be even more ferocious, as opponents are expected to step up their electronic offerings.

More Canadian carriers have emerged to data analytics and new technologies to enhance their underwriting precision, bolster profits and ward off entrants from other industries and geographies. And they’ve tried to court choosy customers with enhanced websites and mobile programs.

But building consumer confidence in electronic insurance services is a work in progress.

“We found at the beginning people were thinking it was too easy — ‘Am I really covered?'” Mr. Rocco said. “We have had to adjust our messaging to strike home that yes, you’re covered … and actually dial this up is a regulated business, that we are a legitimate company with our parent company’s been in existence for 150 years.”

Maintaining visibility can be challenging in a class where the biggest insurance businesses advertise heavily, said Paul Holden, an analyst at CIBC World Markets who follows financial services, but does not directly cover Sonnet.

“It is going to take some time for Sonnet to build brand recognition and to drive traffic. That is going to be a multiyear strategy,” Mr. Holden stated.

Sonnet plays in a marketplace that’s highly competitive and fragmented, with over 200 companies offering property and casualty insurance in Canada. Economical, including Sonnet and other brands of insurance offered primarily through brokers and consultants, had less than 4-per-cent market share in 2016. In the year to come, the marketing team has work to do.

“We have made inroads,” Mr. Rocco said. “But we are still a very low-awareness brand{}”

Courtesy: The Globe And Mail

Posted in: Market Place


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