Canadian Insurance

Karen Doiron, Political Action rep, Professional Development rep and past president, Insurance Brokers Association of PEI (IBAPEI) weighs in on the major issues and the primary causes of concern for brokers in this Maritime province.

Major Issues

•  Credit Scoring: Credit scoring is not a new issue. However, two insurers that do business in PEI decided to use credit scoring [in 2009] and PEI brokers are feeling the effects. This is an issue we will face in 2010.
•  Stay Safe Driver Discount (SSDD): Since the introduction of the Stay Safe Driver Discount in January 2008, there are 14 insurers offering the discount and approximately 2,000 drivers who currently enjoy a 5% to 40% discount. The big debate around SSDD is between carriers who currently do not offer the discount–they say that a risk-sharing pool (RSP) is necessary–and carriers who currently offer the discount–who argue that an RSP would result in substantially higher rates. The Facility Association turned down the request for an RSP, stating that given the small number of drivers who participate, and the high cost of implementation, these risks can be absorbed by the regular market. Also, a willing market exists without the need for an RSP.
•  Banks Trying to Enter the Insurance Market: We are still involved with IBAC regarding issues involving the Bank Act–even after Minister of Finance Jim Flaherty told banks to stop selling insurance through their online portals.

Causes for Concern

•  Under-trained Underwriters: A broker’s lack of control over certain policy decisions is often frustrating–this is particularly the case when inexperienced underwriters attempt to fill in the blanks and rely solely on the technical system. Brokers know that computer software and technological systems are established based on the perfect risk, but this is not realistic and often does not reflect real life.
•  Protecting Clients from Unfair Practices: Credit scoring is not fair to the consumer who has not presented a claim and has been a faithful longtime client. The stigma of being “dumped” or surcharged because of one’s credit score makes it difficult for the client to shop their business, and therefore a lot of good business is affected. It is embarrassing for the broker to explain the insurance company’s philosophy to the client. As much as we would like to have nothing to do with it, the broker still ends up with “egg on their face.” We live in the community and see these people at the hockey rink or in church–and it is difficult to look them in the eye and not feel disgraced by what an insurance company is doing.

Will the government have to step in and regulate to protect the consumer? IBAPEI will be busy in 2010 doing damage control and hopes to be part of a better solution.

Looking Ahead

•  Climate change and water damage are two key issues in 2010. Increasing loss ratios and premiums combined with new restriction and/or surcharges in coverage (e.g. oil tank surcharge) will also be the concerns for this year.

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the February 2010 edition of Canadian Insurance magazine.