Premier Kathleen Wynne entered the Lion’s Den yesterday, opening up the floor to questions at the 93rd Insurance Brokers Association of Ontario Convention.
But the rumblings and grumblings from beleaguered auto insurers were held in check, as brokers asked tough but fair questions of Wynne following her short speech on the current state of Ontario’s insurance industry – questions that zeroed in on not only meeting the province’s mandated 15 per cent premium discount target, but whether that discount will reach those living in the 416/905 area codes.
“I’m heartened by your comments, that you are taking action on the various issues,” said one Brampton broker,” however, my concern is some of the brokers in my area where rates are high – we fear our companies may retract those discounts. Can you assure us as you work through these issues, that you will not allow them to retract from offering insurance in these areas?”
It is a concern that many brokers – along with the IBAO leadership – see as real, as insurers hint at offering 10 or 12 per cent discounts in to those living outside of the Greater Toronto Area (instead of the 8 per cent target set by the province for August of next year), and instead maintain or slightly increase premiums in Toronto and the immediate outlying areas. (continued.)
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“This was an issue that was raised by your leadership right from the outset of this discussion,” said Wynne, referring to the IBAO. “It is the thing that worries me the most, as I don’t want see the marketplace threatened in that way. I want to make sure that we don’t trigger that, and so – I hear you on the urgency of taking action on these issues. It is the sort of thing that keeps a person awake at night."
One of the issues that the premier alluded to was the 38 recommendations that came from the Anti-Fraud task force – of which only four have been implemented to date.
Fraud was identified by the NDP as one of the potential savings to be had in auto insurance. It is estimated to cost the industry $1.6 billion in Ontario alone, representing 15 per cent of auto insurance costs.
Queen’s Park set a target for auto insurers to reduce auto insurance by an average of 15 per cent over the next two years, leaving those in the industry wondering how you can reduce revenues without reducing costs.
Randy Carroll, CEO of the IBAO, thanked the Premier for addressing the industry’s concerns over credit unions and online advertising. (continued.)
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“The IBAO has been working hard at a federal level to ensure we have a level playing field with the banks,” said Carroll, “and we want to make sure we have that same level playing field with credit unions in the province. Thank you.”
Carroll shared the frustration of IBAO members with Insurance Business Online when the Wynne government first announced the 15 per cent target would go into effect.
“Mandating a 15 per cent premium decrease without pairing that with an expense reduction will have a profound impact on the industry,” Carroll told reporters back in August. “It just doesn’t work. Regardless of the type of business that you are running, you cannot reduce revenue without implementing cost reduction measures and expect to succeed.”
That show of appreciation may have been spurred by some good news announced just prior to Wynne’s arrival – that the Premier is now a grandmother three times over – this time of a grandson.
“This is the first grandson for me,” she beamed, “so that makes three.”
Receiving a round of applause from those in the room, it didn’t deter the tough questions on auto insurance, and a determination to push forward on the government acting on the recommendations from the Anti-fraud task force. (continued.)
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“One of the concerns that we have, and we understand it is a big one and needs lots of attention,” said Carroll, “we also understand there is a need for speed of change. If we don’t see speed of change, and the changes on the fraud side, we’ve had early indications that we are going to see rate reductions outside of the GTA. We need to make sure we fix the 416/905 problem, as we have fraud more rampant here than we do outside.
“As we see companies coming through and trying to deliver on their commitment to the government to hit that 8 per cent,” Carroll continued, “we are very concerned that we are going to see rate reductions of 10 to 12 per cent outside of Toronto, and we aren’t going to fix our problem.”
“It speaks to the complexity of this file,” answered the Premier, “and I go back to that meeting we had in my constituency, and discussions on the ‘art of actuarial expense’, if I may frame it that way – so it is in some ways that development (uneven rate reductions) that demonstrates the problem: identifying target reduction; because it is always going to be an average across the province, across the population.
“That is a challenge for people, who see their insurance rates going up, and somebody else’s going down,” said Wynne. “It is why we have to move ahead on the anti-fraud initiatives, as quickly as possible. The minister of finance knows this is a priority, he knows we have to move quickly.”
The IBAO convention continues today and tomorrow at the Fairmont Royal York Hotel in Toronto, Ont.
