April 26, 2004 by Canadian Underwriter
Former Pembridge brand Pafco has received a federal charter to operate as a stand-alone company, although it will continue to target the high-risk or non-standard auto market as before. Pafco has also applied for provincial licenses in Ontario, New Brunswick and Nova Scotia, and says a Quebec application will soon follow.
“Achieving separate company status for Pafco Insurance is a technical distinction, but will have real benefits for Canadian consumers,” says Pembridge president and COO Bob Tisdale. “Once provincial licenses are granted, we can then price and rate this product with greater flexibility than we can today, meaning potentially lower prices for a broader offering of non-standard automobile and homeowner products across the board.”
Tisdale adds that Pafco is responding to the desire to move drivers out of the Facility Association the industry’s pool for high-risk drivers, which, as a market of last resort, should have the highest rates. Pafco is targeting those provinces where government auto insurance reforms make for the best investment opportunity. “We will not be withdrawing our Pafco branded product in those markets which are still viable for us such as Alberta,” he explains “We would like to be able to go there as an independent player, but we await suitable market and regulatory environments that support such further capital investments.”
The stand-alone status will also open up markets for brokers who have struggled to place non-standard auto business, Tisdale goes on to say. For example, in Northern New Brunswick brokers have faced an availability crises, but Pafco now writes through 40 brokerages in the region. “By end of February 2005 we hope to write almost $10 million in auto product in New Brunswick, and that’s business we can take out of the Facility Association at competitive rates. We would have been out sooner, but company charters and regulatory requirements must be met, and take time.”
Tisdale also takes aim at misconceptions that industry profitability in 2003 is a sign that auto markets are healthy in all provinces. “Unfortunately, the factors underlying industry returns have been inaccurately skewed in some public commentary, literally masking our own industry goals to respond to market needs,” he says. “Reforms on the claims side in Ontario, New Brunswick and Nova Scotia have made a response possible over the last quarter of 2003. We still need a year’s experience to demonstrate that the reforms are working well, and in Ontario, there’s still work to be done, but we are optimistic.”