Over-regulation, populism: P&C execs sound the alarm

Canada’s P&C insurance industry is tired of shouldering the weight of “over-regulation” and populist politics.

To counter these influences, the industry needs to spin its own narrative, P&C insurance company executives told attendees at the Insurance Broker Association of Ontario’s annual conference in Toronto.

The industry’s messaging to the public should champion the benefits of a competitive industry offering consumers choice. And it would debunk the threat of collusion if the P&C industry shares ways to eliminate inefficiencies to benefit consumers.

Speakers on the CEO panel at IBAOcon’23 were asked if they felt any additional pressure these days from regulators and politicians, or whether it was the same regulatory pressure, just different politicians.

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Regulating competition

Louis Gagnon, president and CEO of Intact Insurance, suggested the behaviour and rhetoric of regulators and politicians around insurance had the unfortunate effect of making the P&C insurance industry out to be monolithic. In fact, he said, the P&C industry was much more diverse than other industries, providing real choice for consumers.

“In Ontario, there are 21 very active writers of auto insurance. There are three grocery stores, five banks, three life insurance, one Google. So, you want to talk about competition? We are fighting against each other every day for every piece of business that is presented to us.

“And sometimes I feel like we are looked at as one: The Industry. The insurance industry. What the heck is that? Seriously, we have in Canada direct writers, foreign companies, mutual companies, private, public, non-for-profits, cooperatives, that are all competing against each other. Think about that. Think about the landscape of the P&C insurance business. And we are regulated to the…teeth. We are checked [and] looked at, and so, it bugs me.

“It’s like we are constantly being the people pointed out as the culprit in many cases by politicians. I’m tired of that.”

Heather Masterson, president and CEO of Travelers Canada, added when regulators and politicians interfere in the marketplace, the consumer is never best served over the long run.

“You’re talking about a competitive marketplace, with diversity of appetite, diversity of product, perceived capabilities and expertise, and we need to be recognized for that,” she said. “That heathy, diverse marketplace is only going to favour the consumer.”

Related: Regulating business culture. A “solution in search of a problem?”

Masterson said P&C professionals are very good at sharing this narrative with each other. But the message needs to be directed outwards, so that regulators, politicians, and consumers better understand how the industry’s core values are aligned with helping consumers.

“We’re not telling our story externally,” she said. “We’re letting other people tell our story, whether it’s politicians, regulators, lawyers, or consumers.

“We need to start telling our story. Yes, we are diverse and highly competitive; that’s all good. But there is a lot of common ground, common goals, common values that we all share,” she said. “We have amazing contributions that we’re providing to the economy, to communities, to people, to families.

“We really do need to harness that energy, get that message out there together, and we all need to amplify it.”

Collusion confusion

One of the dangers for the industry in banding together to promote its common values is that regulators might view that as a form of “collusion,” observed Paul MacDonald, executive vice president of personal insurance and digital channels at Definity.

Canada’s Competition Act states it against the law for competitors to collude to “fix, maintain, control, prevent, lessen, or eliminate the production or supply of the product,” among other things. The act was modified in June 2023 to ban anti-competitive practices such as price-fixing, market allocation, restricting supply, bid-rigging, wage-fixing, and no-poaching agreements.

The law extends to caution trade associations about the sharing of their members’ sensitive business information.

But when the P&C industry comes together to reduce market inefficiencies, which leads to better product pricing for consumers, that’s not collusion, said MacDonald.

“The one thing that drives me absolutely crazy…is to Louis’s point about the other industries—they’re all oligopolies. Banking is a good [example]. And yet they always meet all the time and talk about what they can do for the betterment of the industry and consumers,” he said.

“And yet at every single [IBC] Insurance Bureau of Canada meeting I attend, the first thing you do is compliance protocol. ‘You’re not allowed to talk about this, that or that,’ as if you are going to collude when you’ve got hundreds of P&C companies.

“How many BMS vendors are there? How many rate-quoting members are there? How many different technologies are there? It is all inefficient. And that inefficiency means more work for you, more work for us, more cost in the system, and more premium for the consumer. And yet we’re hamstrung because we’re perceived as [though] there may be a threat of us working together. It’s a bit ridiculous.”

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Countering populism

MacDonald also discussed the impact of political populism, defined in the Oxford Dictionary as a “political approach striving to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.”

Politicians’ context-free rhetoric isn’t easily disproved by the P&C industry’s facts and data. For that reason, political populism isn’t an arena in which the P&C insurance industry fares well, said MacDonald.

“At the National Insurance Conference of Canada, we had a panel on this,” he said. “One of the presenters was an adviser to politicians [and said], ‘The reality is, you can’t argue with populism. We’re an industry of data and facts. It doesn’t matter. That’s not what’s going to rule the day in the immediate term.’

“So that’s the struggle we’re going to have to come to terms with. And you know, I might lie in bed in the fetal position in the dark, rocking myself back and forth, thinking, ‘How do I make sense of this all?’

“But I think we’re just going to have to weather the storm on that particular issue, and just do what we do, provide the services we do, keep investing in our people in our capabilities, and be better in the future. That’s really the only way we can do it. One step at a time.”

Feature image courtesy of iStock.com/alashi