Despite the constantly changing landscape, ever since insurance has been around, the industry has “accommodated or addressed” these emerging challenges, attendees to the National Insurance Conference of Canada (NICC) heard on Monday.
Neville Henderson, assistant superintendent of the insurance supervision sector of the Office of the Superintendent of Financial Institutions (OSFI), said that he’s seen continuous change throughout his career. “At one point, we never thought it would never change as much as it has and it just continues to go,” he said during a session titled The View from OSFI. “We’ve got a changing world and a changing environment and the industry has to respond.”
Consider the technology challenges surrounding autonomous vehicles. “There are shortfalls,” Henderson noted during his presentation. “Certainly when you get millions of cars on the road and they are all operated by satellites, what happens when you’ve got a major storm, a thunderstorm in particular?” he asked, referring to some reception problems that satellites may experience during severe weather.
As well, “automated cars don’t work that well when you’ve got thinking drivers, human-driven cars,” Henderson suggested. “There’s lots of conflict and they don’t know how to respond.”
While he said “there is no way I’m going to get into an autonomous car,… notwithstanding my personal dislike of automated cars, there are huge opportunities and I think the industry will find them.” Some auto manufacturers have even starting looking towards insurance related to autonomous vehicles, whether it’s for the technology or the vehicle itself, “but there are going to be big questions about who gets the insurance, whether it is the manufacturer [or] the owner of the cars,” Henderson (pictured below) said.
NICC emcee Amanda Lang and Neville Henderson. Courtesy of MSA Research.
“There are all sorts of question marks about coverage going forward,” he suggested. “My sense is there will be tremendous opportunities for the insurance industry. They may actually be the carriers of the coverage. It’s going to create huge opportunities going forward, it’s just a matter of finding how to apply them.”
There is even talk about mandating coverage for driverless vehicles, but Henderson said he hopes that day is not anytime soon.
Cyber risk is another technological concern, as “there is no experience” or historical data related to the risk and the costs can be “gargantuan,” he said. “We monitor what they do there very closely,” Henderson told conference delegates. “Pricing is an aspect; with no experience, it’s hard to know what that would be, so put adequate margins in,” he advised. “They need to set up contracts and provisions so that they control their risk” and conduct appropriate stress testing to preserve capital and stay solvent.
When it comes to technology, the regulator conducts “significant activity reviews” by constantly monitoring the industry. It also has internal committees to look at emerging issues. “We will respond to how the industry behaves,” Henderson said.
NICC is being held at the Quebec City Convention Centre from Oct. 1 to 3.