New Canadian auto insurance product coming soon

Intact Insurance will be soon launching a new iteration of its usage-based auto insurance (UBI), a company official says.

The revelation came during a July 31, 2018 conference call about the insurer’s past quarter results. During the call, an investment analyst asked Intact executives if a UBI solution offered by Metromile Inc., a U.S.-based auto insurer, might be a good fit for Canada. Toronto-based Intact, which launched UBI about four years ago, made an investment in 2016 in Metromile Inc., a United States auto insurer that uses distance driven to set rates.

Company officials did not give a direct yes-or-no answer, but Intact CEO Charles Brindamour noted that Metromile’s approach “very much relies on telematics.”

Intact has “a huge telematics program in Canada that is focussed on behaviour, first and foremost, whereas Metromile’s is focussed on the amount of driving you are doing,” Brindamour said during the call.

In addition to distance driven, Intact takes into account other factors – such as hard braking and sudden acceleration – in determining whether or not to give an auto insurance client a discount.

Intact is “very much focused” on finding new ways to promote and select risk, Brindamour said. “This is a platform that is evolving.”

Intact “will be soon launching a new iteration” of its UBI program, Darren Godfrey, Intact’s vice president of personal lines, said during the conference call. He did not go into detail.

Intact officials have said in the past that the company has data, gleaned from telematics, that relates to billions of kilometres driven by Intact auto insurance customers. Using data analytics, auto insurers are able to find statistical correlations between certain types of behaviour and claims frequency.

San Francisco-based Metromile Inc. offers insurance in Calinfornia, Pennsylvania, Illinois, New Jersey, Virgnina, Washington and Oregon.

In July 2018, CAA Insurance in Ontario launched MyPace, an auto insurance product that rates based on total distance driven – data gleaned from telematics as a rating factor. Vehicles insured under MyPace are quoted a “base rate” and charged in 1,000-kilometre increments. The “base rate” uses traditional auto insurance rating factors such as make and model of vehicle, drivers’ experience and location.

More Ontario auto insurers will probably follow the lead of CAA Insurance and launch programs similar to MyPace, according to Justin Thouin, co-founder and CEO of LowestRates.ca, who spoke to Canadian Underwriter this past May after CAA announced MyPace.

Profits “will probably be higher” for insurance companies offering products similar in concept to MyPace “because they lower [the insurers’] risk if these people are driving less,” Thouin said at the time.