Issues Affecting The Claims Manager

Deficient infrastructure is a significant problem in many areas, which could lead to restrictions on coverage or the creation of a different pricing structure, according to panelists at the Canadian Insurance Claims Managers’ Association (CICMA) general meeting.

George Cooke, president and CEO of The Dominion, noted at the Sept. 9 meeting the lack of proper infrastructure is a significant issue in many areas — one that can be seen in the recent losses in Hamilton after the city saw more than 37 mm of rain fall on July 26. In order to curb rising claims frequency and insurance costs, it is likely in the future there will be restrictions on certain coverages.

There will likely be a different pricing structure for water coverage, and there will be a definite impact on the marketplace, Louis Gagnon, president of Intact Insurance, added.

The panel also discussed what they believed needed to be done in order to develop the “right calculator” in regards to insurance to value. For Gagnon, there appears to be a lack of generally defined best practices in the industry for determining insurance to value, or determining replacement costs. “We need to strive to develop best practices,” he said.

Cooke noted that while the direct-writer model may lend itself to the use of calculators, it doesn’t work so well for broker-model companies. He said perhaps it is time to consider dumping the current calculator tools and simplifying matters by simply determining square footage and other basic characteristics of the risk and charging premium. “The dilemma then becomes only determining the right amount of premium,” he said. “If we properly define the problem we can work towards the right solution.”

When looking at the Ontario auto insurance product, panelists were asked to pick the one thing they would change.

Gagnon said he would want caps on benefits for both tort and accident benefits and for certain treatments that AB responds to.

Cooke said, while he does not want to choose just one, would go back to a pre-no-fault pure tort system. He says he thinks Ontario should move to defining what a minor injury is as they do in Alberta, Nova Scotia, New Brunswick, and Prince Edward Island, rather than what a serious and permanent injury is. There should be a basic standard package of coverage with many other coverages being optional.

Alain Thibault, president & CEO, TD Insurance, said if he had only one choice, he would go back to the Ontario Motorist Protection Plan, (OMPP) (1990-1994). Otherwise, more currently standard coverages becoming optional would be a benefit. He adds a more clear definition of catastrophic injury would be helpful and that stronger exclusions on the tort side would produce the necessary savings.

While the panelists had thoughts on how to improve the product, none expressed full confidence in the fixability of it.

Thibault says he does not believe that there is a one-time fix for the product and that constant tweaking will be necessary. He noted he was cautiously optimistic.

The auto insurance product is a very big challenge for government to fix, Gagnon said, adding he is not sure if it is possible. He expressed concern about ongoing affordability for consumers and just how much a consumer may understand with respect to the impact and the reasons for the changes within the product.

Cooke said he thinks the government is concerned about maintaining affordability and that there will likely be an announcement by mid-October. This will have a strong consumer thrust and with more choice, but the ultimate outcome may bear little resemblance to the FSCO report.

~ With files from Troy Bourassa