The departure of George Kalopsis will be sorely felt, but it is a decision that shouldn’t come as a bolt from the blue, says the Chief Executive Officer of
Echelon Insurance, Steve Dobronyi.
“I think he’s been mulling over it for a while,” Dobronyi told
Insurance Business. “I think he’s also had some medical issues – he’s off on medical leave, after having his hip replaced. Maybe that gave him time to reflect.”
Dobronyi did stress that although on medical leave, the departure of Kalopsis was not due to health reasons.
As for finding a replacement for Kalopsis, that is a process that had already begun with the earlier departure of John Czerwinski, the former Executive Vice President of the Personal Lines Division, several months ago.
“When John left, we began looking for a replacement,” said Dobronyi, “and we’ve found somebody. We haven’t announced it yet, but we will be doing so shortly.”
Part of that proce
ss – taking into consideration the vacuum left by Kalopsis – will require reorganization, said Dobronyi, “and we’re just working through that right now.”
While looking forward, Dobronyi did take a moment to look back and reflect on the state of Ontario auto since joining Echelon five years ago.
“Auto was going sideways, I think we had a $9 million underwriting loss in my first quarter here, and another $9 million underwriting loss in the second quarter here,” he said. “I think we’ve made a lot of progress over the last several years in regards to getting the right people in place and the right systems in place.”
Part of that has been refocusing the business to become a specialty auto insurer, selling through the broker distribution channel. (continued.)
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“That focus has allowed us to really determine where we want to spend our resources and our time and our capital,” said Dobronyi. “I think the success over the past number of years and the progressing toward our 12 per cent ROE (return on equity) target has demonstrated the success of that.”
Part of that growth has included taking Echelon beyond Ontario’s borders.
“We were Ontario-focused with non-standard auto,” says Dobronyi, “we have expanded over the last number of years. Now Ontario non-standard auto is about 35 per cent of our business, down significantly from 90 plus per cent eight to 10 years ago. We have diversified across the country.”
Part of the diversification includes buying an MGA in Western Canada a couple of years ago, and closing a transaction with an insurance company in Prince Edward Island last year, he says.
“We’ve got a strong business in Quebec, and we’ve just hired a senior leader to grow that business,” says Dobronyi. “So we are growing outside of Ontario; but again primarily focused on that specialty auto business.”
When it came to Ontario’s auto business, George Kalopsis had a lot to say to
Insurance Business in an interview back in the summer:
“The cold, hard reality is that we are still facing a fundamentally flawed product. And the one key example is the lack of a clear, and sustainable definition of catastrophic impairment, and the whole rate filing protocol that we have to go through. Whether we like it or not, auto insurance is a political issue in Ontario. All of us in this industry view it as a technical issue, but it is now, and it will remain, in the political realm.
“I think we need to reboot this product, instead of trying to put a patch on top of a patch on top of a patch – even with the best of intentions – which has been done over the past 30 years. It will take a lot of will and courage from all sides. Not just from a regulatory perspective, but from insurance companies and all key stakeholders. It’s time to come to grips with this.
“I’m not sure this is the most popular answer, but I would say Quebec. They’ve been running a system that has been in effect since the 1970s, and the public seems to be happy. They aren’t clamouring for a major gutting of the system. Costs are low, and consumers are happy with that.
“I believe, philosophically, a government-run system doesn’t work. Competition forces you to sharpen your product. Iron sharpens iron.
“The clarity and the simplicity of the Quebec system would be a welcome change not just to the Ontario system, but probably in many other jurisdictions across the country. What you see in Quebec is that first-party benefits have been pretty consistent; a broken arm has a fixed value. There’s no arguing – it is what it is.”
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For Dobronyi, there are positives and negatives about selling auto insurance in the province.
“Ontario auto insurance – it is a dirty word and a clean word,” says Dobronyi. “The market cycles, and part of that is industry-driven and part of that is politics. And we ride those cycles. Probably as a non-standard insurer we ride them harder than others; but that is the nature of the business: there are good times and there are bad times.
“Our goal as a small company is to make sure we adapt to changing market conditions,” he says, “if we can do that, we’ll be successful.”
