May 11, 2018 by Jason Contant
Brokers in Ontario are concerned that if auto insurance in the province remains unsustainable, companies may start to leave the market.
Traci Boland, chairwoman of the Insurance Brokers Association of Ontario (IBAO), spoke to Canadian Underwriter Thursday about trends in Ontario auto (as well as home and commercial lines). She said that companies are filing for rate increases, but not getting them; sometimes, not even close to what they were requesting.
“We know that companies have to be financially stable and sustainable for the future,” said Boland, who is also a partner at Ontario West Insurance Brokers in London. “If they’re not able to sustain the auto product in Ontario, we’re worried that companies will start pulling out.”
Companies that are not getting the rate increases they want and managing disappointing results are often blaming Ontario auto. Bigger companies can sometimes rely on positive year-end results from other provinces to balance the books, but “what about Ontario?” Boland asked. “Our mutuals, are they going to be able to sustain year after year of auto insurance not paying for itself in Ontario?”
Boland said the 35 recommendations contained in David Marshall’s report on auto insurance would help to address the issues facing Ontario auto. Among the recommendations are:
“The government is not actually looking at the problem,” she said. “To mandate a reduction in premium does not fix the auto issue in Ontario,” Boland said, referring to the provincial government’s plan in 2013 to cut auto rates by 15%.
With the upcoming provincial election on June 7, the spotlight again is on all three political parties to fix the product. “But just guaranteeing that the rates are going to decrease doesn’t fix the product and we are afraid we are going to lose companies on this,” she said.
Boland added that some companies have pulled back on things such as technology initiatives and broker partnering for marketing. “If they’ve got to get that 5%, they’ve got to get it somewhere.”