Technological innovation is not among the goals of some government regulators overseeing insurance markets, but some can be persuaded to allow innovation if a determined insurance provider presents “a good case study,” speakers suggested Tuesday at the Insurance-Canada.ca Executive Forum.
“We as insurers have hidden behind the regulators for a long time and have said, ‘Gosh, I would love to do that but I won’t be allowed to,” said David Crozier, president and chief executive officer of Everest Insurance Company of Canada. “We haven’t necessarily asked the question before saying that.”
Crozier made his comments during a panel discussion, Canadian Perspectives on InsurTech. The moderator – Neil Mitchell, managing director of Marsh Canada – asked panelists about the commercialization of insurtech and whether the regulator is a “catalyst” for transformation.
“Innovation is not their goal,” said Matteo Carbone, Milan-based founder and director of Connected Insurance Observatory, commenting in general on regulators around the world. Regulators, Carbone suggested, are there to protect consumers “but to do that they need to understand the business models.”
During a separate presentation at Executive Forum – titled The Future of Insurance is InsurTech – Carbone suggested that worldwide, there are “probably more than 1,000 startups that are trying to bring value to the insurance value chain.” Carbone added that “in the future all the insurance players will be insurtech, meaning organizations that will use technology as key enablers to achieve their strategic goals.”
Few of today’s insurtech firms will survive, “but a few players will be relevant and will change the sector,” Carbone predicted.
Executive Forum is an annual one-day event held at the Sheraton Centre in Toronto.
During the Canadian perspectives panel at this year’s Executive Forum, Carbone told attendees he has worked with insurance regulators in both the United States and Europe.
“There is a common trend that they are starting to realize they need to build knowledge about insurance innovation,” Carbone said.
“Typically what comes out of a discussion with an insurer is ‘the regulator doesn’t allow us to do pricing with the data,’” Carbone reported. “But today that data is already data by someone else so what is the barrier of going to an insurer and asking them to create an affinity to that small cluster of clients that was created using the data? The regulator is not controlling the technology player.”
Other panelists cited examples of Ontario government responding to a push from the insurance industry. This past May, the ruling Liberals announced in their budget document for 2017-18 that they would allow electronic proof of auto insurance in the province.
“For years it was the insurers saying, ‘Regulators won’t let us do that,’” Crozier said of electronic pink slips. But the Financial Services Commission of Ontario “kind of said, ‘nobody has really asked and nobody has demonstrated to us how it can be done,’” Crozier said. “Once it was demonstrated, we are moving very very rapidly to that.”
Lorie Phair, managing director of the Canadian Broker Network, cited the example of Ingenie Canada Inc., which launched usage-based insurance targeting young drivers in 2015. At that time, Phair was CEO of Ingenie Canada.
“Not only was it about reduced pricing for young people … but it was very much about helping them be better drivers,” Phair said Tuesday of Ingenie’s offering in Canada in 2015.
“We took it to FSCO – probably the first time a brokerage played a very active role in new product innovation working with FSCO,” she said. “We went to FSCO with our launch partner and it took a very long time to get it approved.”
But FSCO officials “were open to it,” Phair said of the telematics-based UBI offering. “They saw the benefit. It took numerous iterations … but it finally did get done.”
If an insurance provider approaches the regulator with “a good argument, a good case study, and determination, you can get it done,” Phair said.