Ever since the 2013 Alberta floods, advocates have intensified calls for increased regulation of property insurance markets – but experts warn that government intervention could be disastrous for brokers.
One even believes that it could even result in a situation similar to the contentious auto insurance industry in Ontario.
“If you really want a good case of how well-intentioned regulatory outcomes can go awry and not be met with an understanding of products and the market, Ontario auto provides that example,” said Philip Howell former CEO of the Financial Services Commission of Ontario at the 2015 NICC Canada conference in Montreal.
While Howell doesn’t feel that new legislation is “imminent,” he acknowledges that government intervention is “much more probable now than it was ten to 20 years ago.”
He references Ontario’s no fault insurance policies in particular to showcase that “reacting to crises by imposing regulatory solutions can create an environment with poor regulatory design.”
In addition, burdensome regulation could result in consumers who are only left with substandard products in the marketplace.
“Regulated products tend not to keep up with innovation,” said Karen Gavan, president and CEO, Economical Insurance.
An audience poll revealed that more than 50% of insurance professionals believe personal property is at risk of becoming more like its auto counterpart “from the perspective of political intervention, prescriptive regulation and excessive cost.”
Brokers have a mandate to uphold their profession and ensure that they are able to continue providing optimal services for consumers.
“The necessary condition for the industry is not just to feel that regulation is inevitable and can’t be avoided,” Howell said. “I think it’s better to get actively involved and realize you’re going to be involved but understand the forces that drive decisions by elected officials and move to counter those.”
Education and branding are paramount as well.
“As an industry, collectively, we have a long way to go in terms of meeting consumers’ needs and playing a strong leadership role when it comes to perception,” Gavan said. “We haven’t made this industry to be an important financial pillar it has to be to provide safety and security for Canadians.”
Gavan believes that this will only be successful if insurance professionals can band together as a united front.
“We have a tremendous opportunity but it requires focus and working effectively with lobbyist associations, the IBC, distribution partners and their associations even to the point of educating employees better so they can be great spokespeople for our entire industry,” she said.