Canadian Underwriter

Intact Insurance to launch revised water peril product in 2016

October 26, 2015   by Jason Contant, Online Editor

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Intact Insurance will launch a revised water peril product next year, the company’s president said last week at the Insurance Brokers Association of Ontario’s (IBAO) 2015 convention in Toronto.

Intact Insurance president Jean-Francois Blais said that the insurer examined at least 30 situations in which water can damage a home

Jean-François Blais made the announcement during the CEO Panel at the convention, held at the Sheraton Centre on Thursday. He said the insurer looked at the “maybe more than 30 different situations” in which water can damage a home in an attempt to keep to the company’s goal of covering water damage as much as possible.

“So we’ve come up with a revised property product that we are launching in 2016 where basically we have reviewed the base policy, rewritten some exclusions, removed some exclusions, so we have much better transparency,” Blais said. “With a base policy and two additional endorsements, basically you can buy all the water coverage you need and that exists out there in some way or some form.”

While he did not provide further specifics of the policy, Blais said that with “climate change and the different weather patterns,” in existence today, Intact realized it had to rethink how it managed the peril. And the product had to be delivered in a simple manner, so it could be understood by customers, but also by brokers and regulators.

When a consumer looks at an insurance contract, it can be difficult to understand the difference between the different types of water claims, Blais (pictured below) conceded. “Sometimes it’s covered, sometimes it’s not,” he said. “It’s very confusing and the last thing we want is to say to someone, ‘Well, you’ve paid for a contract and you’re not covered.’ The worst case scenario for the insurance industry is to deny a claim.”

Jean-Francois Blais, president of Intact Insurance

Greg Somerville, president and CEO of Aviva Canada, agreed that the water peril can be confusing, pointing to the Alberta and Ontario floods of 2013. “Coming out of 2013, obviously we saw a huge area of uncertainty in the minds of consumers as it relates to the water peril, particularly overland water.” Somerville added that Aviva Canada was “pleased to deliver a solution to the Canadian market this year,” referring to the company’s overland water protection for residential property owners and tenants, offered through its network of independent brokers.

Announced on June 2, the coverage was originally offered as an add-on to personal property policies in Alberta and Ontario that have sewer back-up protection in place. Canadian Underwriter reported at the time that it was also to be offered in other provinces throughout the rest of this year.

Rowan Saunders, president and CEO of RSA Canada, also agreed with other other panellists that “there is not a crisp clarity around coverage.”

“It’s not quite clear what you get; what’s covered, what’s not,” Saunders said. “From a consumer’s perspective, one neighbour has this loss covered, the next neighbour doesn’t. We saw that acutely in the floods in Alberta in 2013.”

Another panellist, Karen Gavan, president and CEO of Economical Insurance, suggested that the industry needs a “tremendous amount of product innovation in the property product” and to do a better job of informing their consumers.

“I think some unbundling would be really good for the product to make it clear to the consumer what are the risks they are trying to protect [against] and they can make value judgements on whether or not they think they need insurance to mitigate those risks,” Gavan said. “Consumers don’t value the product because they don’t understand the risks that they are exposed to and that’s where the broker distribution channel has a leg up on the direct channel because you have that opportunity to give advice.”

The panellists made the comments in response to a question from moderator George Cooke, president of Martello Associates Consulting, who said that “brokers hear consumers say that they pay too much insurance and they don’t perceive the alignment between the price they pay and the value they receive.” Other panellists included Duane Sanders, president and CEO of Travelers Canada and Sylvie Paquette, president and CEO of Desjardins General Insurance Group Inc.

Speaking about his company’s own upcoming product, Blais said that they will be discussing it with their brokers over the next couple of months as well as training their underwriters. “We’ve decided to act,” he said. “We think boldly on this issue.”

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Technology transforming insurance, broker channel, IBAO Convention hears

Travelers Canada ‘trying to figure out how best to proceed’ with telematics-based auto insurance

IBAO continues efforts to maintain restrictions on banks selling insurance

RIBO CEO, IBAO graduating CAIB class among those honoured at 2015 convention in Toronto