Unlike its competitors, which focus on life moments such as buying a home, Sonnet has made abstract ‘optimism’ the core of its ad materials.
Sonnet launched into the Canadian insurance market with an ad that was not about insurance, exactly. It was about "optimism," and featured a symbol for the Facebook age: a rocket shaped like a giant thumbs-up. One year on, the quirky brand marketing insurance to tech-savvy Canadians has not exactly hit the stratosphere.
Sonnet, a division of Waterloo, Ont.-based Economical Group, now has more than 30,000 customers here, which is still barely a blip in Canada's property and casualty insurance market where $53.4-billion in direct written premiums were collected on insurance on homes, cars and businesses last year.
Building a brand is expected to be a slow process, particularly in a market in which Sonnet is only competing for the half of consumers who are willing to buy insurance directly without a broker – and in which, according to Sonnet's customer research, 70 per cent of people auto-renew their insurance, even though 75 per cent are unhappy with their provider.
"It's not a big pool, necessarily, that you're pulling from," said John Rocco, vice-president of marketing at Sonnet. "I look at those numbers, and it tells me we are taking a disproportionate share of the available market."
Sonnet is attempting to capitalize on consumer habits it has seen grow elsewhere: While the likes of Geico Corp., Allstate Corp. and Progressive Corp. have made digital self-serve a norm in insurance buying in the U.S. market, Canada has lagged behind. Even though some of the largest players, such as Intact Financial Corp.'s Belair Direct brand, have built up extensive online platforms to sell insurance directly to consumers, the standard procedure includes connecting with customers by phone before a policy is issued. Speaking to a human isn't necessary to become a Sonnet customer.
Sonnet is coming off a year of "significant" marketing investment to kick-start that strategy and has built a team of marketers recruited from companies in the retail, automotive, hospitality and cosmetics industries. A series of ads has attempted to put a friendlier face on an industry that is fundamentally built around people's fears that something could go horribly wrong. Sonnet's marketing focuses on life moments, such as building a home or getting married and some abstract scenarios such as the rocket or riding a fake dolphin. (Because, optimism.)
Changing customer perceptions of what to expect from an insurer has proved difficult.
"The inertia is strong," Mr. Rocco said, adding that consumers are extremely "apathetic" about purchasing insurance or switching providers.
Competition going into its second year will likely be even more fierce, as competitors are expected to step up their digital offerings.
More Canadian insurers have looked to data analytics and new technologies to improve their underwriting accuracy, bolster profits and ward off entrants from other industries and geographies. And they have attempted to court choosy consumers with improved websites and mobile apps.
But building consumer trust in digital insurance services is a work in progress.
"We found in the beginning people were thinking it was too simple – 'Am I actually covered?'" Mr. Rocco said. "We've had to adjust our messaging to hit home that yes, you are covered … and really dial up that this is a regulated industry, that we're a legitimate company with scale and our parent company has been around for 150 years."
Maintaining visibility is also challenging in a category where the largest insurance companies advertise heavily, said Paul Holden, an analyst at CIBC World Markets who follows financial services, but doesn't directly cover Sonnet.
"It's going to take time for Sonnet to build brand recognition and to really drive traffic. That's going to be a multiyear strategy," Mr. Holden said.
Sonnet plays in a market that is highly competitive and fragmented, with more than 200 businesses offering property and casualty insurance in Canada. Economical, which includes Sonnet and other brands of insurance sold primarily through brokers and advisers, had less than 4-per-cent market share in 2016. In the year to come, the marketing team has work to do.
"We've made inroads," Mr. Rocco said. "But we're still a very low-awareness brand."
Susan Krashinsky Robertson