There isn’t one silver bullet needed to cure Ontario’s ailing auto insurance system, but several; and right now the chambers are empty, says the president of one of the province’s largest auto insurers.
“Fighting fraud is important, but I don’t think it gets us to the 15 per cent,” says George Kalopsis, the president and chief operating officer at
Echelon Insurance, referring to the government’s mandate for Ontario auto insurers to reduce auto insurance premiums 15 per cent by 2015. “You can reduce costs for insurers by streamlining the filing process, and develop a clear and sustainable definition of catastrophic impairment. There is no one silver bullet. They are all important, but unfortunately, we’re missing some of those bullets in our gun right now.”
Although frustrated at how auto insurance has been politicized, Kalopsis does feel optimistic that the current Liberal government has the best interests of the industry at heart.
“I give this government credit,” he told Insurance Business, “because more than governments in the past in Ontario, they actually seem committed to combatting fraud in a very legitimate and tangible way.
“That said, I think that the fraud detection methods will help – but in and of themselves, they won’t allow us to meet the 15 per cent target.”
Two of the biggest hurdles to the current system is how catastrophic impairment is defined, and the rate filing protocol, says Kalopsis.
“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,” he says. “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.” (continued.)
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While insurers see as “clear and logical solutions to a long-standing problem,” may not be necessarily clear to everyone else or viewed the same way, says Kalopsis.
And what may be needed is not another fix, but a major overhaul.
“I think we need to reboot this product,” he says, “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.”
Tomorrow: Is there a better system out there?
