The insurance industry’s reputation has been challenged over the past year for a number of reasons beyond the COVID-19 pandemic, according to Don Forgeron, president and CEO of the Insurance Bureau of Canada (IBC).
“We went into the pandemic with challenges in the commercial space – we had a hard market. The pandemic has not made that any better,” he said. “We have challenges in the condo space in different parts of the country, the hospitality sector, trucking - the list goes on and on.”
In February 2020, before the coronavirus pandemic really took grip in Canada, the IBC created a National Commercial Insurance Task Force with the aim of assessing the impacts of the hardening global commercial insurance market on Canadian companies and consumers.
“As we looked down the road, we could see this hardening market causing some challenges,” Forgeron reflected. “It has changed a bit through the pandemic, but the challenges are still there and they’re not going to vanish overnight.
“It would be easy, but I think dangerous, for the industry simply to step back and say: ‘This is how the [insurance] market works; it will correct itself.’ We know that, in time, it will correct itself, but I don’t think that’s a responsible view for a responsible industry to take, especially in the midst of a pandemic.”
One of the most pressing insurance issues in Canada – leading up to and during the pandemic – are the skyrocketing insurance rates in the condo/strata market, especially in the western provinces of British Columbia and Alberta. The reasons behind the extreme market tightening are multifaceted, but typically relate to poor loss history (especially water claims) and increased costs for building repairs and maintenance.
When the IBC launched the National Commercial Insurance Task Force, it also revealed a “multi-faceted approach” action plan to address Canada’s pressing condominium insurance issues, in addition to engaging a risk manager who would assist condo and strata corporations in securing insurance. This is an example of what Forgeron described as “becoming part of the solution.”
This proactive, problem-solving mindset was more important than ever during the pandemic. The CEO noted: “Even if you aren’t part of the problem, that’s how you’re going to be perceived. And so, we’ve been working very diligently to become part of the solution to help small businesses find cover [during the pandemic].” The IBC has been working very closely with the Canadian Federation of Independent Business (CFIB) over the past year to provide education, advice and insurance support to small businesses as they navigate the pandemic.
A second huge and ongoing area of focus for the IBC is auto insurance. This is another significant pain point for consumers across the country, as premium rates continue to climb in most provinces. While most insurers handed out auto insurance premium relief in 2020 due to reduced driving amid the pandemic, that doesn’t fix the wider challenges at play around soaring claims costs, fraud, regulation, and so on.
“There’s no question that our industry and the products that we sell, is more political than other sectors,” Forgeron added. “We have to ask ourselves why that is, and what we can do to try and depoliticize some of the issues that creep up from time to time. One of those issues is auto insurance. [Throughout the pandemic] the industry has given back over $2.5 billion to Canadians, but there are some who think that’s not enough. That’s a challenge for the industry.
“In addition to that, when you look at the regulatory landscape for auto insurance in Canada, I don’t know that you can regulate this industry any more than it currently is, short of having government actually just take it over and sell the product, because they regulate within an inch of its life just about every aspect of automobile insurance. And so that continues to be a focus for us just because it makes up so much of the industry’s top and bottom lines.”
