December 18, 2019 by Canadian Underwriter
John Taylor, President, CEO, Ontario Mutual Insurance Association (OMIA)
This year, we have not only a new year to think about, but a brand-new decade. The start of the last decade was a much different place: the financial world was taking its first tentative steps towards recovery, and many of today’s market disrupters did not yet exist.
I think 2020 could be a very active and disruptive year for automobile insurers, with the potential convergence of three trends — auto regulation, model governance, and affordable repair costs. All of these trends will require action by the P&C industry as well as other stakeholders, including consumers and government. Although my perspective is Ontario-centric, these trends also have a national profile.
In Ontario, our provincial government has shown an appetite to move quickly on almost any proposed legislative change. They frame these changes around making life more affordable for taxpayers/consumers and business more viable by reducing red tape. The automobile insurance marketplace may be ripe for this type of change, and 2020 may be the year when a fundamentally different auto insurance product is deemed “open for business.”
From an insurer and distribution standpoint, we may have to move quickly if the product is opened up to allow more options, fewer process-based restrictions, and an expanded online or digital marketplace for auto insurance.
A second trend, signaled by regulators, is insurer responsibility for “model governance.” With analytical “black box” rating and selection models now a standard practice, there is increasing concern about the possibility of pricing decisions that lack transparency and that cannot be explained to consumers. Regulators have seen a groundswell of pushback against the random collection and use of consumer data by high-tech companies, and I think they are prepared to be the “conscience of consumers,” by calling on insurers to make insurance pricing understandable.
Finally, 2020 may be the year to push for greater affordability regarding auto physical damage repair. With embedded technology at its core, the cost of repair has spiked. Ultimately this is passed onto consumers. A clear path must be identified to ensure the collision repair industry remains competitive and that proprietary manufacturer technology does not create repair monopolies.