Brokers ‘terrified of making a mistake’ – WTW personal lines leader
Brokers ‘terrified of making a mistake’ – WTW personal lines leader | Insurance Business Canada
Motor & Fleet
Brokers ‘terrified of making a mistake’ – WTW personal lines leader
Recent appointee on auto insurance challenges
Motor & Fleet
By
David Saric
Brokers are under pressure and afraid of making mistakes, WTW’s recently appointed practice leader for personal lines has told Insurance Business in the wake of the Ontario insurance regulator’s findings on Take-All-Comers breachs.
Ontario’s auto insurance industry was hit with a blow as 12 of the top companies in the sector were revealed to have negated the Take-All-Comers policy set up by the FSRA.
“There are a lot of insurers that are losing money on this line of coverage,” said Allison Bryce, the newly named national practice leader for personal lines at WTW.
“As a result, insurers are trying to make a more profitable book of business that may not seem appealing to clients, which creates a conundrum.”
In an interview with Insurance Business, Bryce spoke about why brokers and insurers are having a tricky time in the auto insurance marketplace. She also revealed why the industry’s reactive approach to climate change may not be the best and how insurance can relay its value better to consumers.
“Brokers are terrified of making a mistake when selling a policy”
Ontario’s 12 biggest auto insurers have been called out for “systemic” regulatory non-compliance, with two Aviva companies — AIC and S&Y — having been fined $300,000 each for noncompliance with the Take-All-Comers precedent.
Brokers can also come under a lot of pressure to make sure they are meeting business objectives and complying with provincial regulations.
“I don’t think brokers who are selling auto insurance are actively trying to break the rules,” Bryce said.
Brokers can contend with handling large chunk of business.
“As an example, a group program may no longer have the endorsement of the association,” Bryce said.
“And then as a broker, you’re dealing with trying to then move all this business out of there, you’re constantly trying to make sure that you’ve offered all the various options within an existing company.”
Because there is so much business on such a small margin, a broker may miss some minute but important details that would amount to an unintentional oversight.
“I know that people on the front lines in brokerages are terrified of making a mistake when selling a policy and tracing that error down the pipeline to them, especially if the company is being held fiscally responsible,” Bryce said.
What did the FSRA find on Take-all-comers?
According to the FSRA, insurers have engaged in practices that made it more difficult for certain types of consumers to obtain auto insurance quotes, the regulator set out.
The FSRA found that non-compliance had resulted in the following:
Higher Premium Cost: Consumers viewed as “higher” or “low-quality” risk were unable to get a quote and/or coverage from the insurer with the lowest premium, despite being eligible based on that insurer’s filed and approved underwriting rules.
Unfavourable Discretion: Insurers used unfiled underwriting rules to suspend an intermediary’s binding authority and the automated quoting and underwriting process was replaced with manual underwriting.
Unfair competition: Take-All-Comers contraventions also led insurers to steer “riskier” consumers away from themselves and toward other insurers. This undermines fair competition, creating an unlevel playing field in the market.
Less choice: Take-All-Comers contraventions meant consumers had less choice in insurance providers because they were unable to obtain policies, despite their eligibility under insurers’ filed and approved underwriting rules.
Wasted time: Consumers’ time was wasted because insurance coverage was made more difficult to find.”
When investigating AIC and S&Y, the FSRA noted that it did not find any evidence that this non-compliance was intentional, something Bryce agreed is likely the case for insurers providing similar coverage.
Widespread auto theft is also posing a problem
Data from the Solicitor General of Ontario shows a car is stolen every 48 minutes in the province. From 2014 to 2021, instances of theft skyrocketed by 72%, with a 14% increase in the last year alone.
“The rising rate of auto theft in the country is getting out of hand,” Bryce said.
While many drivers are taking precautions to safeguard their vehicles’, organized crime is continuing to drive theft to unprecedented levels.
As a result, insurance rates are rising astronomically, especially as individuals are being targeted more than once.
“This is creating sustainability issues with coverage, since these events are happening at a rapid pace, and in some instances, affecting clients more than once within a fiscal year,” Bryce said.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
