Canadian Underwriter

What insurers aren’t passing on to their clients

March 9, 2021   by Adam Malik

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Canadian consumers are still foggy about the purpose and content of their home, auto and business insurance, and the onus is on the industry to help them understand, a pair of industry executives said during a recent webinar.

Discussions with customers have to go beyond the contract language, said Monica Ningen, president and CEO of Canada and English Caribbean at Swiss Re.

“It’s really understanding what we cover, what we don’t cover — insurance and reinsurance — but making sure consumers understand what they’re buying; and that they understand the coverage they have within that contract,” she said during the recent CatIQ Connect event in the session State of the Industry. “You’re always going to have class actions, but the [fewer] class actions you have, and the [fewer] consumer complaints you have, the better off we as an industry are.”

The priority for the P&C industry should be on communities and helping them learn how to become more resilient. Education plays an important role here, said Carol Jardine, president of Canadian P&C operations at Wawanesa.

Communities can help the effort by sharing what they know about the risk and how to reduce it,” Jardine added. “Communities that are going to be subjected to high-risk events need to be aware [of the risk]. They need to communicate and not hide [that information from] people that live in those communities.”

Jardine said she regretted the fact that many people in Calgary didn’t know they were living in hail alley when a June hailstorm slammed the area.

Clockwise from top left, moderator Paul Kovacs of ICLR, Monica Ningen from Swiss Re, Carol Jardine, of Wawanesa and Peter Askew from Guy Carpenter, speak at the CatIQ Connect session, “State of the Industry.”

“Shame on us,” she said. “We underwrote for it. Our reinsurers underwrote for it. But they were surprised, so for me, it’s maybe education, but maybe [also] talking about risk in a more transparent way, [so that] people in communities can at least understand it. I think pandemic has heightened the ability to talk about risk.”

One theme that keeps popping up for Ningen is “preparedness.” The better prepared one is for an event, the easier it is to navigate through it. The problem is, such risks are often brushed off because few believe something is imminent.

“If you look back in time, there’s a series of large events that we’ve responded to that we all knew could happen,” Ningen said. “We didn’t ever expect the World Trade Center [attacks] to happen, but people knew a terrorist attack like that could happen.”

The pandemic has reinforced the concept of tail risk, Ningen observed. “We show up at these conferences, year after year, and we talked about these tail risks, and we say phrases like, ‘It’s not if it can happen, it’s when it could happen.’ And people say, ‘Yeah, but that’s not in my lifetime. That’s later.’

“I think this [pandemic] has shown that we have to be prepared, because these events will and can show up during our lifetime. It’s our responsibility to make sure that our organizations are prepared to be able to service our clients and [support] the resiliency of the communities in which we operate.”

Think of climate change and its effects on society and the insurance industry, Ningen stressed. It’s time to really pay attention to what it may lead to.

“Climate change, it’s not going away,” she said. “And it’s vital for industry to really think about how we operate within it. [We should know] what we have to do to make sure that we can maintain financially stable organizations long-term and be there for our customers through this.”

For Jardine, the trouble with talking about events as ‘one-in-100-year events’ is that people remove the possibility from their minds because the chance of it happening is so small. “We have to accept that catastrophe risk is going to happen,” she said. “It’s not going to be a one-in-a-100-year event. It’s not going to be a surprise. And we’re going to have that loss [regularly].”

For the industry, it might be a matter of framing the risk differently. If major events happen more frequently, it changes the way customers may think about how they protect themselves. For example, if there’s now a chance a natural catastrophe could strike once in the next 25 years, that means it’ll likely happen during the life of a customer’s mortgage.

“If you know what’s going to happen during the mortgage, what would you do to protect your property?” Jardine said. “So I think we have to pay a price for it and speak confidently about the impact on the primary pricing.”


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