Selling insurance in Newfoundland has become a lot more interesting and challenging, says one broker, who is banking on new products absorbing the economic hit from dropping oil prices.
C.J. Nolan, vice president of sales and business development at Munn Insurance Ltd., in St. John’s, N.L., has been a big part of bringing the business into the 21st century, through such initiatives as deploying Applied’s Epic system to allow for online quoting of Munn’s 33,000 clients.
“We still a two-tiered brokerage here, but we switched from radio ads and TV ads, moving to digital online marketing,” says Nolan. “Now everything is search engine optimization. You want to be among the first five on that search page. The days of people looking you up in the Yellow Pages is gone.”
While Epic is still a few months away from full deployment, says Nolan, he did share a few observations and expectations for what 2015 holds in store.
Products: What’s hot? What’s not?
Hot – Cyber
“This year we’ve seen a lot more requests for cyber. We’ve got people actually asking for it now. I know we as a company bought cyber cover this year,” says Nolan. “A lot of companies don’t realize what their cyber exposure is, but they are now starting to realize it.
What has helped sell the product are the headline-grabbing cyber hacks of Sony and Target Stores, says Nolan.
Professional Liability
And although he can’t explain it, the professional liability product is flying off the shelves.
“We’ve sold more professional liability in the last 12 months than in my whole career,” says Nolan, who speculates that perhaps – again – media coverage of the Jian Ghomeshi /CBC scandal and court case is convincing executives and companies of the value of liability cover.
Not – Hospitality
One market that is hardening up is the hospitality product, says Nolan.
“The whole hospitality product, we’re starting to see that line dry up here – I don’t know what it is like in the rest of Canada,” he says, “but the hospitality market is really starting to harden up.” (continued.)
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There have been a number of losses on properties – from bars to hotels – from B.C. to Newfoundland that have spurred an increase in rates, says Nolan. “Some companies like
Aviva have taken a really tough stand, demanding that there be at least three years of experience for claims,” he says. “Especially the stuff for seasonal.”
Car insurance
UBI: Wait and See
Drivers are interested in user-based insurance, says Nolan, but at the moment the political will is not there to push the regulator into action.
“User-based insurance, or telematics, that’s on the horizon and everybody wants to see where that is going,” says Nolan. “Newfoundland has had three premiers in 12 months, and politically they are trying to get their house in order first before the regulator can weigh in on telematics here.”
Auto needs an overhaul
Although Nolan acknowledges Ontario insurers are wrestling with the 15 per cent premium cut target that must be met by August, he points out that Newfoundland drivers are continuing to take a hit on premium due to ever-rising bodily injury claims.
“We have a $2,500 deductible on any bodily injury claim in Newfoundland (not a cap system). The rest of Atlantic Canada, there is a cap on bodily injury claims of $7,500,” says Nolan. “They are two completely different products. In Newfoundland, if someone has a lawyer, they are seeing claims starting at $40,000.”
For brokers and drivers alike, it is a situation that needs to be addressed now, without playing the blame game. (continued.)
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“We’re not talking about what the government should or shouldn’t do; but currently with the way that claims are going – and we’ve seen rate increases going through at anywhere from 9 per cent or higher in multiple years – something’s got to give at some point,” he says. “We’re seeing average premiums of $1,300 for a single vehicle here in Newfoundland, and in the CAP provinces, their average premium is under $800.”
Oil and Newfoundland’s economy
And although drivers are rejoicing at the dropping price at the pumps, Nolan sees plummeting oil prices hurting his province, and those who have been earning a living from the offshore oil industry.
“Looking at 2015, there are a lot of things for brokers to consider, and that includes plunging oil prices and the effect on oil-producing provinces versus non-oil producing provinces,” he says. “We’ve adjusted our budget here at Munn Insurance for 2015. We’re not going to have a loss, for sure, but being in an oil-producing province – it makes you reconsider your budget and your expenses.
“I think with things going the way they are, with oil prices going down and good-paying jobs becoming scarce, people are going to start watching their money.
“I don’t think it is all doom and gloom, but you do need to readjust your budget and expenses.”
