Industry “much healthier” than in 2003: IBAO panel

Reflecting on the situation facing Ontario insurers a year ago, company CEOs say the picture this year is a much healthier one.
A panel of insurance company CEOs addressed the industry’s financial outlook as well as the lingering issue of public image, at the Insurance Brokers Association of Ontario Convention in Toronto. While the industry has made great strides in profitability, they say, there is much work to be done to regain the confidence of consumers.
“Two years ago, our own survival was our concern,” reflects Igal Mayer, CEO of Aviva Canada, commenting on the lack of profitability and depletion of capital which characterized the p&c insurance industry when he first spoke at the IBAO Convention. Following two years of auto insurance reform, which has been a “step forward” in controlling claims costs and abuse of the system, he now says, “Ontario is today a much healthier market”.
“Cautious optimism” is the order of the day, as insurers and the public wait to see if the early positive outcomes of auto reform can be sustained, notes George Cooke, CEO of The Dominion of Canada General Insurance Co. He notes that frequency of auto claims is down, but this may be as much an effect of what he calls the “fear factor”, i.e. consumers not filing claims for fear of premiums going up, as the impact of reform measures. He says, however, that with much of the “fat” taken out of the injury rehabilitation portion of claims costs, there is a reduced incentive to abuse the system.
The industry’s return to profitability should spur further consolidation, notes Derek Iles, executive vice president of ING Insurance Co. of Canada, whose company just bought out Allianz Canada. He says that the short-term inconveniences posed by consolidation moves are outweighed by longer-term benefits, including stability and the ability of the industry to have a “clearer voice” with the public and regulators. And, he adds, it is a far better strategy to increase marketshare through acquisition than through reducing rates.
There appears to be a new, more positive mood in the industry, comments Rowan Saunders, CEO of Royal & SunAlliance Insurance Co. of Canada. But this optimism needs to be translated to consumers, who are still very untrusting of insurers. “I think consumers are going to be watching us very carefully.”
Speakers agree that public image remains a key challenge for the industry, even with the reduction in auto insurance premiums across jurisdictions and the depopulation of the Facility Association. “We, collectively, are well-motivated for the good of the public,” stresses Cooke, who points to the work done to help consumers following disasters such as the Peterborough floods earlier this year and last year’s Kelowna wildfires.
The Insurance Bureau of Canada (IBC) has reassessed its role in public relations and is prepared to invest in research and education in “areas where we are experts”, says Mayer. This includes road safety, injury prevention and disaster mitigation. Cooke, who heads the IBC committee implementing these plans, says the goal will be to partner with well-respected organizations to fund projects which help the public, as well as educating the public on the role and importance of insurance.