Insurer remains committed to specialty auto market

If you’re looking to place non-standard auto coverage for your client, rest assured that one insurer remains committed to that marketplace.

“Through Echelon, we are absolutely committed to being in that, I’ll use the word specialty market. I don’t like calling our insurance non-standard,” Matthew Turack, president of CAA Insurance, said during the Insurance Brokers Association of Ontario (IBAO) Convention last week.

“We are absolutely committed to continuing to be in that market to serve that space. There is a need within the marketplace for it,” he said. “We’re not looking at expanding into more of a standard field within Echelon.”

Echelon Insurance was acquired by CAA Club Group, which owns CAA Insurance, in May 2019. Non-standard, or specialty, auto was the largest part of Echelon’s business.

Turack said during the IBAO Convention CEO Panel that there is a space and specific risks that belong in the specialty auto insurance market, and CAA Insurance is “continuing to grow it. So, I don’t believe that we’re at all at risk of losing companies to the marketplace.”

Matthew Turack, president of CAA Insurance, speaking at the IBAO Convention CEO Panel.

What Turack has seen, however, is markets starting to take on risks that would traditionally fall into the specialty or non-standard arena. “That does concern me, because from a price point from a market cycle, we’ve seen this before,” he said. “We’ve seen these cycles where companies take on larger risks or expand their risk appetite and underwriting risk appetite.

“And then, all of a sudden, loss ratios climb and it ends up hurting the standard customers or the domestic market,” he said. “You need a specialty [insurer] in that you need to understand what you’re writing, how you’re writing it, and what the discipline and claims philosophy is around that.”

Moderator Colin Simpson, chief executive officer of IBAO, asked how the broker network can access the specialty auto insurance market if brokers have to be contracted with larger organizations.

“What we’ve done from a contracting with broker [perspective] is we have looked for brokers who have not only the ability internally to know what fits into that specialty market or where it would go into the standard market,” Turack responded, “but they have the capacity and the expertise to know how to manage the business.”

That expertise comes from experience, overall internal staffing procedures, beliefs and partnerships.

To the broker network, Turack said “if you’re trying to manage the one-offs, I think there’s partnerships you can find with brokers who have contacts within the marketplace who have enough specialty and size to manage that book. I think it’s also okay to say this is not your specialty.

“We’ve seen brokers who have just kind of filled the one off,” he added. “And we’ve seen other brokers who actually have sizeable books, good aggregation, and really great specialty to know how to manage it.”

Feature image by iStock.com/Kameleon007