To prepare for the June 7 Ontario election, brokers should be prepared to explain very basic concepts about the property and casualty insurance industry to political candidates, a former head of the provincial brokers’ association suggests.
Many election candidates “don’t have any idea” that the province regulates both the policy wording of the auto insurance product and the price, said Rodney Hancock, chief executive officer of McFarlan Rowlands Insurance Brokers Inc. in London.
Hancock was asked by the Insurance Brokers Association of Ontario (IBAO) to meet with one local political candidate and provide information on insurance.
“What I emphasize is, the auto product is something that everybody has to buy, there is no choice about that and it’s all regulated by the government,” said Hancock, who served in 2008 as IBAO’s president.
IBAO is asking brokers to meet with specific candidates “to explain what the association does, talk about the auto product, the relationship between brokers and insurers and the Financial Services Commission of Ontario with respect to the auto product,” Hancock said. He added the “goal” is to have a broker meet with every single candidate. Brokers are also asked to explain the difference between brokers, agents and direct sellers to the candidates.
Auto insurance “always seems to come up as an election issue to a certain extent,” he said. “Most people don’t understand how that process works.”
For private passenger auto in Ontario, carriers must submit proposed rates, along with supporting actuarial data, to FSCO for approval.
FSCO is mandated to review insurers’ assumptions regarding claims costs, expenses and investment income to ensure that proposed rates are not excessive and to not cause risk to the insurer’s solvency.
“Most people don’t know that – that the rates are filed and then the government decides what the increase or decrease is going to be,” Hancock said Monday in an interview.
The New Democratic Party promises to mandate a 15% decrease in the average private passenger auto insurance premium. This mirrors a promise the Liberals made in 2013 with the passage of the Automobile Insurance Rate Stabilization Act, which aimed to cut by 15%, over two years, the industry-wide average auto rate.
But as of the end of 2016, the actual decrease was only 8.3%, A.M. Best Company Inc. said in a report released in late summer of 2017.