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Alberta Auto
ALBERTA AUTO What changes mean for Alberta’s auto challenges
Despite new bill, there’s still much work to be done, experts say
BY JASON CONTANT, Online Editor
Both the Insurance Brokers Association of Alberta (IBAA) and the Insurance Bureau of Canada (IBC) believe that recent changes to auto insurance regulations in Alberta will reduce costs in the system. But more needs to be done around auto reform, they say.
Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act, received royal assent Dec. 9. Among other changes, the bill and related Orders in Council expand the number of injuries that fall under the Minor Injury Regulation and limit the number of expert witnesses that can be used in motor vehicle accident injury claims.
“The bill really tackles the ‘low-hanging fruit’ which needed to be done,” said IBAA CEO George Hodgson. “However, much more fundamental reform is needed to take costs out of the system.”
The association’s white paper on auto reform released in March 2020 recommended a hybrid no-fault system. IBAA suggested broadening the auto insurance product to offer Alberta consumers the option of choosing either an unlimited or limited right to sue (with certain parameters) in exchange for premium flexibility.
An auto insurance advisory committee had recommended in September 2020 that the province move to a pure no-fault system delivered by private insurers, a change IBC said would not be in the best interest of drivers. “The changes the government made were actually just updates to the current system, which is more just a hybrid between tort and a no-fault system,” Celyeste Power, vice president of IBC’s Western region, said just after Bill 41 passed second reading in November.
“Under Bill 41, [consumers] still have the right to sue,” Hodgson added. “It is not pure no-fault.”
Rather, the bill introduced a “direct compensation for property damage” framework into the system. This first-payer system for physical vehicle damage is in every other private auto insurance jurisdiction in the country, Power said.
“Customers won’t notice any changes
RESTRICTING PAYOUTS | JAN 11
Canada’s solvency regulator announced it won’t consider allowing banks and insurers to hike dividends, offer share buybacks, or increase executive compensation until COVID-19 lockdowns have subsided and there is more economic certainty.
INCENTIVIZING
INCENTIVES | JAN 8
Ontario’s insurance regulator is looking for public feedback on its proposal to relax the rules prohibiting unfair or deceptive acts, allowing insurers to offer rebates and incentives to consumers under certain circumstances.
other than if they are in an accident, instead of having to sue or go through the other driver’s insurer to pay for the damage to their car, they can now get that through their insurer,” she explained. “It really just moves the claims process for the customer.”
The changes to the Minor Injury Regulation and limiting the number of expert witnesses in auto claims should “reduce claims costs and stabilize premiums in the system,” Power said. The definition of a ‘certified examiner’ now includes dentists, and the definition for a minor injury now includes a sprain, strain or whiplash-associated disorder injury caused by the accident that does not result in serious impairment, whether physical or psychological in nature.
Under the previous definition, “what was happening for a while in the auto insurance system in Alberta is that claims costs related to pain and suffering around injuries that are considered minor in most other jurisdictions…were not being considered minor in Alberta,” Power said. “That was leading to more and more settlements outside of the minor injury cap, leading to higher claims costs.”
The bill also adds dentists, occupational therapists and psychologists to the diagnostic treatment protocol. “So, where they refined the minor injury definition, which will reduce claims costs, they did expand the treatment and care to make sure that people could get better, which comes at a cost itself,” Power said.
She and Hodgson agree that the bill is an improvement from the 5% rate cap that was in place before in Alberta. “The 5% cap did nothing to reduce costs and created a situation where insurers tried various ways to make their products less attractive…and as a result, made getting insurance more difficult,” Hodgson said. “The items in Bill 41 at least have the potential to reduce costs, thereby easing the pressure on premium increases.”
BROKER CONTINUING EDUCATION PLATFORM
Vendor: Wawanesa Mutual Insurance Company Target Audience: Brokers What it Does: Helps Wawanesa broker partners and their team members meet the expectations of the Canadian Council of Insurance Regulators (CCIR) when distributing insurance products Wawanesa Mutual Insurance Company has introduced a new digital educational platform to help their broker partners sell and service Wawanesa’s products and services. Launched on Jan. 7, the new platform, in the words of the insurer, will be available to “all Wawanesa broker partners and their team members, and assist everyone in meeting the expectations of the [CCIR] in the distribution of insurance to Canadians.” The Broker Continuing Education platform represents the next generation of Wawanesa’s broker training with access to training on-demand, including instant self-serve access to multiple courses, ongoing new additions, and the flexibility of logging in from a computer or a mobile device. “With our previous broker training program, Wawanesa delivered nearly 350 training sessions to over 20,000 brokers,” said Graham Haigh, the insurer’s vice president of broker distribution. “With our new program, we are building on our commitment to brokers and empowering them with better digital training tools to provide excellent service to our mutual policyholders.”
ENHANCED WORKING FROM HOME COVERAGE
Vendor: Intact Financial Corporation Target Audience: Intact customers What it Does: Provides customers working from home increased liability and home coverage, optional identity theft coverage and other benefits Intact Financial Corporation is offering enhanced protection to give customers working from home increased liability and home coverage, the option to add identity theft coverage and cyber protection at a discount, as well as free access to mental health and well-being programs for a limited time. The enhanced protection provides customers with increased liability and home coverage for people working from home. Through my Identity, existing and new customers can also add identity theft coverage and cyber protection to their home policy at a discount. Plus, for a limited time, customers can enjoy free access to online mental health and well-being programs through LifeSpeak. Based on changing driving habits and patterns, Intact is also offering my Drive customers personalized feedback and tips to improve their safe driving and the opportunity to earn up to 25% off their auto insurance premiums.
TESTING CLIMATE RISK | JAN 7
The Office of the Superintendent of Financial Institutions (OSFI) will launch a pilot project in 2021 to test the impact of various climate-related risks on financial institutions’ bottom lines, including risks connected to a transition to a low-greenhouse gas economy. SURETY BONDS PRODUCT
Vendor: Apollo Insurance Solutions Ltd. Target Audience: Brokers and their clients What it Does: Allows brokers to bind a variety of bonds for contractors and businesses with amounts available from $10,000 to $100,000 Brokers and their clients can now purchase a surety bonds product through the Apollo Exchange, an insurance technology platform that enables brokers to transact insurance online in real time. Brokers are able to bind a variety of bonds for contractors and businesses with amounts available from $10,000 to $100,000. Available terms include one, two, and three years. The product is available in British Columbia, Alberta, Saskatchewan, Prince Edward Island, and Yukon. Brokers receive 25% commission on this product. The entire process, including quoting, binding coverage, and issuing policy documents, is immediate and digital. The bond will be sent to the principal by mail within 48 hours of purchase.
COST OF CATS | JAN 5
Insured losses from natural catastrophes in Canada totalled nearly $2.5 billion last year, CatIQ reported. Between 2009 and 2019, national severe weather losses across the country averaged about $1.9 billion annually.
BIG MOVES SUMMARY
EMERGING RISKS
AXA XL gets new country manager
Global commercial insurer AXA XL taps Renato Rodrigues from Brazil to lead the commercial insurer's Canadian branch.
Risk of insolvencies, more D&O claims
ALLIANZ GLOBAL CORPORATE & SPECIALTY
WHO: Renato Rodrigues CURRENT ROLE: Country manager for Canada, AXA XL P&C EXPERIENCE: 20+ years PROFILE: Seven years as country manager for AXA XL Brazil. Regional leader for insurance in Latin America, AXA XL. Previously worked for Chubb and Liberty International.
Renato Rodrigues is AXA XL’s new country manager for Canada.
Rodrigues previously led AXA XL’s Latin American insurance business. At press time, he was planning to move to Toronto from Sao Paulo, Brazil, once the COVID-19 restrictions enable him and his family to relocate.
At AXA XL’s Canadian operation, Rodrigues succeeds Glen Hopkinson, who was appointed interim Canadian country manager in October 2020. Hopkinson had temporarily replaced Urs Uhlmann, who had been country manager since 2018. Before joining AXA XL, Uhlmann had been CEO of Zurich Canada.
For his part, Rodrigues served seven years as country manager for AXA XL Brazil. Most recently, he has been AXA XL's regional leader for insurance in Latin America. In his new role overseeing the insurer’s Canadian operation, Rodrigues reports to Joe Tocco, AXA XL’s CEO of the Americas.
Rodrigues has “extensive experience leading international commercial insurance across the Americas,” says Tocco. “He is a fantastic team leader and brings a wealth of knowledge in commercial P&C insurance and overall business strategy, which will support our growth objectives in Canada.”
AXA XL was known as XL Catlin until Paris-based AXA acquired Bermuda-based XL Group PLC in 2018. XL had acquired Catlin Group in 2015.
Apollo Insurance Solutions Ltd. has hired Marco Andolfatto as its new chief underwriting officer. Andolfatto was most recently senior vice president and chief strategy officer at Totten Insurance Group, a Canadian MGA owned by Hub International. Charles Taylor Adjusting has promoted Michael Guy to be its managing director and regional head of Canada. Guy was previously Charles Taylor Adjusting’s vice president and branch manager. Guy has been a claims adjuster since 1996. Adam Romano has been appointed head of the Allianz Global Corporate Specialty (AGCS) Canada liability team. Romano will be based in Toronto and reports to Dieter Hautzer, North America regional head of liability. Romano has worked for AGCS since 2016.
REMOTE MANAGEMENT | JAN 5
Managers of a remote workforce will no longer be overseers in an office culture, Vala Afshar wrote in ZDNet. They will be more like orchestra conductors, bringing individual remote workers’ talents and skills together to deliver solutions to consumers. The global COVID-19 pandemic, which fuelled the biggest economic downturn in a century, will leave the economic outlook volatile, thus increasing the likelihood of insolvencies and directors and officers (D&O) claims.
That warning is contained in a new report from Allianz Global Corporate & Specialty (AGCS), entitled Directors and Officers Insurance Insights 2021. The report highlights five trends that will leave the D&O market on its heels; the volatile economy (and related insolvency exposure) ranks as the top risk.
The report cites Cornerstone Research, which points to six “mega” bankruptcy filings involving businesses with at least US$1 billion in reported assets during 2020 Q1. That number spiked to 31 in the second quarter, with another 15 in the third, for a total of 52. The quarterly average from 2005-19 was just five.
Credit insurance company Euler Hermes said the worst is yet to come, particularly in the first half of 2021, per the AGCS report.
Could a COVID-19 vaccine reverse some of these fears?
“We expect markets to remain fragile in view of the recent extreme bullish reaction to positive COVID-19 vaccine news,” David Van den Berghe, global head of financial institutions at AGCS, said in the report.
“Further, the tech war between the U.S. and China, and the end of the Brexit transition period, will remain top of mind as well, and adds to an overall high level of economic uncertainty.”
Other threats highlighted in the AGCS report include: increased securities class action activity; cybersecurity threats; diversity; climate change; environmental, social and governance (ESG) factors (generally due to inaction on such issues); and specific challenges for private companies, such as employee-related and breach of fiduciary duties lawsuits. ts.
RETAINING CLIENTS | JAN 5
The insurance industry has spent too much time and effort searching for new business at the expense of client retention, which is a far more affordable strategy, said Christian Bieck, insurance global research leader at the IBM Institute for Business Value.
HOW THE PANDEMIC HAS IMPACTED AN ALREADY CHANGING INDUSTRY
With its lockdowns and limitations, the COVID-19 pandemic has increased demand for convenience in how goods and services are sold and delivered — including insurance.
Tom Reikman, SVP and Chief Distribution Officer at Economical Insurance, says that for brokers and insurers, the ongoing trend toward enhanced service delivery and digital transformation has just accelerated. “The P&C industry has lagged behind other service sectors in offering that seamless experience,” he notes. “But now, customers expect conveniences like immediate quotes and having 24-hour access to their personal accounts and information.”
Many brokers are adapting, including not only where and how they work, but with whom. Reikman points out that, all else being equal, CSRs and producers are understandably more inclined to go with the carrier that has reliable, efficient systems for quoting, submission, and servicing of policies, as well as the ability to provide them with easy access to information. More than that, their customers are looking for choices, something brokers are uniquely positioned to offer. “Consumers are clearly telling us: ‘Give me options, give me ways to save money, and give me the ability to connect with you when and how I want to,’” he says. For Reikman, that kind of smooth synergy between in-person and online is key. “So as an insurer that aspires to make insurance better, we need to always ask: ‘How does the customer want to interact with our brokers, and us? What do we need to add or adjust within our value proposition?’ A flexible, focused, client-centric approach is the goal.”
The rapidly changing market space will also continue to accelerate expectations. “Many of our broker partners are growing their businesses. They recognize that to maintain momentum and meet evolving customer demands, they too must evolve. They want access to Sonnet-like digital capabilities and enhanced service offerings — like online information access — to meet those changing needs,” he notes.
Reikman acknowledges another challenge will be finding new ways to attract and retain clients. He says this can be strategically achieved through value-added offerings (like telematics), utilizing marketing analytics, increasing breadth of product offering (“bundling the customer”), and finding a meaningful way to properly recognize customer loyalty. These are all areas where he says Economical places focus. Lastly, he encourages brokers to be nimble, whether it’s from a customer service perspective, recruiting talented employees, or investing in technology. “Customers expect us to be responsive and efficient,” he says. “My suggestion is to ask yourself: ‘How critical is this to the success of my business? Can I quickly adjust course if needed? What will the impact
of what we do now be in two, three, or even four years — and what if we don’t do it?’” It’s been Economical’s mantra, and the reason its corporate strategy is designed to “embrace focused innovation and be a disruptor, instead of being disrupted.”
For Reikman, that kind of focus on long-term gain is everything, whether for a 150-year-old company like Economical or a brokerage: “Those who are adaptive, diligent, and committed to investing the time and resources today are the ones who will be successful and yielding the benefits tomorrow.” Reacting with speed is a quality that’s essential during an unparalleled situation like the pandemic — and beyond. “It may be hard sometimes,” he says, “but keep looking forward.”
– Tom Reikman, Economical
