Overland flood coverage currently top product development priority: OMIA CEO

With the increased risk appetite for new or expanded products among mutual insurers, overland flood coverage is the number one product development priority, John Taylor, president and CEO of the Ontario Mutual Insurance Association (OMIA), said Thursday during its Annual General Meeting (AGM).

“New risks, new competition as well as an increased risk appetite among the mutuals have created greater interest in either new or expanded products,” Taylor told delegates and guests assembled for the AGM in downtown Toronto.

Calling product development a very important activity for OMIA, he said that recently introduced offerings have included drone coverage for agriculture applications and cyber coverage for businesses, with overland flood coverage “currently the number one development priority.”

Overland flood coverage is “tricky,” Taylor suggests, pointing out that, to date, Canada’s property and casualty industry has responded in a wide variety of ways.

“That’s a challenge for policyholders, it’s a challenge for agents and brokers, it’s a challenge for companies,” he said in an interview with Canadian Underwriter following the AGM.

In light of how quickly things are moving, OMIA’s first focus, regardless of product, will always be to determine what it needs to do to “service our policyholders,” he told CU. “They need that coverage the same as anybody else. What does it look like? What does it cost? How does it get selected?” he said.

“When we offer something, not every mutual may decide to offer it,” Taylor explained. “We make it available for them so that they can then decide if they’ve got an appetite to do it.”

Asked about mutuals’ greater openness to new and expanded products, Taylor (below right) responded that there has always been some degree of openness.

John Taylor, president and CEO, Ontario Mutual Insurance Association (OMIA)

That said, “like everybody else in the industry, we’re seeing that the industry is moving increasingly fast between concept and delivery,” he pointed out. “The industry’s moving fast so we have to be prepared to keep up with that, but at the same time, we have to be prudent in terms of what we’re taking on,” he added.

Consider what has happened around public awareness of drones in just a couple of years, Taylor suggested. “Drones have gone from being, ‘What’s that?’, from a general public standpoint, to all of a sudden being a major risk category,” he said.

“Our mutuals don’t need to be standalone drone insurers, but we do need to recognize that some of our policyholders will be using drones,” Taylor said, citing the coverage now available for agricultural operations.

The drone offering is “an example of choosing a niche and moving into it and trying to be proactive,” he said, adding that the same approach was used with the recent cyber offering for small businesses.

“We know we insure a fair number of small businesses. We don’t need to be the world’s largest cyber insurer; we’re not looking to insure financial institutions and other things. What we’re looking for is for the folks that we insure, and in the areas we would like to grow,” Taylor explained.

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The offering means “you’ve got something that allows your policyholders to stay with you if they need cyber coverage. They don’t have to go look for it separately,” he said.

That stickiness is likely something any insurer hopes to achieve.

“Our business model has been to work through underwriting and selection that allows long-term relationships,” Taylor said. “We’re not interested in jumping into business and then getting out of it. If we get into a business, it’s to stay in a business,” he emphasized.

Building customer retention and loyalty is not about “chasing a fad,” Taylor said plainly. A product should be “something you’re prepared to introduce, but then you are prepared to continue to develop it and support it,” he said.

“I think we really do have to look at where things are developing, what that looks like, and then we do have to say how does that apply to our policyholders as we understand them, and that could include future policyholders that we haven’t attracted as yet,” Taylor told CU.

“We look at what the trends are, see how those are affecting our demographic policyholders and then move to make sure they’ve got what they need,” he said.