October 23, 2020 by Jason Contant, Online Editor
Price turned out to be a key sticking point behind Uber’s decision to end its five-year-long business relationship with Canada’s largest insurer, according to a senior Intact executive.
Economical Insurance announced in August that it would become the ridesharing giant’s new insurer, effective Sept. 1, 2020.
“Over time, as these commercial relationships do evolve, I think we came to a point where we couldn’t agree on price with [Uber] and they chose to move the book to someone else,” Louis Marcotte, senior vice president and chief financial officer of Intact Financial Corporation, said Sept. 15 during the Barclays Global Financial Services Virtual Conference. “We’re still in a very good relationship. We just couldn’t agree on the pricing levels and they had the freedom to go and they took that opportunity.”
Marcotte was asked by Barclays’ senior analyst John Aiken during a virtual fireside chat why Intact didn’t maintain the contract with Uber. The two companies have been working together since 2015 to develop a tailor-made ridesharing solution for drivers and passengers.
An Intact spokesperson confirmed that “Intact Insurance and belairdirect will continue to allow customers with a personal auto policy to participate in ridesharing. Intact continues to see opportunities for growth and innovation in the sharing economy and will continue to develop insurance products in order to respond to customer needs.”
Economical now provides commercial auto coverage for every Uber Rides and Uber Eats trip in Alberta, Ontario and Quebec. In Nova Scotia, coverage is only for the delivery of goods via Uber Eats, since Uber Rides doesn’t operate in the province.
Coverage for drivers operating on the Uber platform will continue seamlessly, and there will be no gaps between the personal and usage-based commercial auto coverage, Economical said recently.
Ridesharing insurance in Canada was designed with complete coverage in mind, the company’s vice president of commercial underwriting and specialty lines, Obaid Rahman, told Canadian Underwriter. “Many personal lines carriers have an endorsement for [one period of ridesharing], or they just cover it because they consider it personal exposure. If that’s not the case, there is coverage on the commercial policy. There is no coverage gap and it’s dealt with on both sides of the house.”
One broker observed: “I wouldn’t be surprised if a ton of [ridesharing drivers] were with insurers, and never disclosed [that they were driving their vehicles for commercial purposes], and never knew they had to, and they just thought they were insured with Uber.”
Economical sought Uber’s business because the insurer sees mobility becoming more digitized. “For us, this was a natural evolution…where we could get into digital mobility on the commercial side,” Rahman said. “That’s the trend. Given the path we’re on towards being the leading digital insurer, it was natural for us to go toward this.”
Before Marcotte revealed the negotations around price at the virtual conference, Canadian Underwriter had asked brokers for their take on the move from Intact to Economical.
Curtis Killen, president of Quebec brokerage KBD Insurance, said he couldn’t speak for Intact on why they let the Uber account slide. “But as you know, auto insurance remains difficult in terms of profitability across Canada, so I’m assuming this had something to do with it,” he said.
Another broker, who was granted anonymity to avoid possible repercussions from speaking candidly, agreed that “insurance companies generally don’t let go of something if they are making obscene amounts of money. We don’t know if Uber was the one to say, ‘Hey, Intact, you’re making too much and we want to go somewhere else.’”
Feature image via iStock.com/nadia_bormotova