Why brokers are feeling the squeeze from directs

Canadian Underwriter’s 2026 National Broker Survey results are in, and concern over the direct-to-consumer sales channel is on the rise. Fifty-four percent of respondents cited the growth of directs as a challenge to the broker channel, up four points over last year.

From a national perspective, Insurance Brokers Association of Canada (IBAC) CEO Peter Braid says the industry has seen a slight erosion of market share in personal lines since the COVID pandemic. The affordability crisis has also had an impact, he says.

Karim Mouait, president of the Insurance Brokers Association of Alberta (IBAA) and Cornerstone Insurance Brokers Ltd., agrees. “Directs market themselves as cheaper, faster, and simpler,” he explains. “There’s a pricing perception, and even if the price difference is minimal or non-existent, that perception is powerful.”

Insurance Brokers Association of Ontario CEO Colin Simpson adds a caveat to this, recognizing part of the broker value proposition is to offer the right coverage for the right price. “With cost of living continually increasing, the perceived pressure is on consumers to look for cheaper options – but not necessarily the right options.”

Julie Skelton, executive director and chief operating officer of the Insurance Brokers Association of B.C., reiterates insurance is a complex product that requires advice from a qualified broker. “My concern on the direct side is the perception a personalized solution is simple and straightforward, that anybody can go online as though they are picking out an Amazon order and it’ll be fine. Insurance is not that type of product.”

Regional considerations

There are also regional implications. For example, brokers in high-risk natural catastrophe areas tend to have a stronger market hold. That’s because directs can opt out of writing in certain areas, and local brokers have more options.

“In Alberta,” says Mouait, “we deal with wind, hail, wildfire, and flooding. Those high-risk zones bring complexity and place risk on certain carriers, so brokers have the advantage.”

B.C. has exposure in earthquake, wildfire, and overland water. “That trifecta,” says Skelton, “means the more market a brokerage can expose the risk and look at solutions with, the better for the consumer. If it’s a direct writer with one solution, a client may not fit.”

Another advantage in B.C. is the public auto system in the personalized space does not allow directs to sell those policies. The same is true in Manitoba and Saskatchewan.

Directs are also pulling out of Alberta as a result of rate caps. CUMIS, a subsidiary of Co-operators General Insurance, stopped offering quotes and renewals for home and auto effective January 1. They were the fourth provider to leave the province in just two years.

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In Ontario, Simpson says changes to auto insurance that come into force July 1 will put a bit more focus on product pricing. “Technically,” he says, “you can now access a product more cheaply because nine benefits included in accident coverage will become optional.”

Challenges are also likely more pronounced in regions with the highest levels of market choice, says Braid. “And what that tells me is we need to cut through the noise in those markets to ensure consumers are making informed decisions.”

Consumer messaging

The channel can do that in many ways, broker association leaders tell CU. Association advertising programs are one avenue. Broker self-advocacy is another.

For the most part, brokers agree they are communicating the value of their value proposition — advice, choice and advocacy — effectively to consumers, CU’s national broker survey suggests.

Eighty percent of the 169 brokers surveyed in CU‘s 2026 National Broker Survey either agreed greatly or somewhat with the statement: “Brokers are successfully communicating their value to consumers and businesses.”

But the proportion of brokers who agreed “greatly” slipped from 24% last year to 19% this year.

“We need to emphasize the value proposition of choice, advice, and advocacy; better demonstrate how consumers benefit by being served by brokers; and sharpen our messaging that brokers save consumers both time and money by shopping around for the right coverage at the best price,” says Braid.

Skelton says it is important consumers understand a broker can support all their insurance needs. Another benefit: “When a broker works with a client, they teach them to think as though they are in a claim, how a policy will respond, and why that coverage is important.”

Many brokers also specialize in cultures and languages, adds Simpson, including one brokerage originally founded in Ontario to meet the specific needs of Chinese and Korean communities now offering services in 16 languages across three provinces.

Last but not least, Mouait says anything with any sense of complexity is where brokers continue to shine and reminds brokers they are adaptable. “Two decades ago, the banks were going to put us out of business. Then it was the internet. Then online brokers. But we’re still here.”