What will happen to personal lines rates in Canada?

Brokerage's new chief insurance officer explains

What will happen to personal lines rates in Canada?

Insurance News

By Gia Snape

Rising premiums in personal lines insurance, particularly home and auto insurance, have created challenges for brokers and policyholders alike.

According to the Applied Rating Index, Canadian home insurance rates increased 10.9% year-over-year in the first quarter of 2024, with BC (18.3%) and Ontario (12.7%) seeing the largest rises. At the same time, personal auto premium rates increased 13.3% in 2024 Q1 compared to 2023 Q1.

Home insurance rate increases are in keeping with escalating claims costs arising from the fourth-worst catastrophe season in Canadian history last year. Insurers paid out $3.1 billion in cat claims in 2023, led by the worst wildfire season in Canadian history.

For Billyard Insurance Group (BIG), the challenges come hand-in-hand with opportunities. The Welland, Ontario-based brokerage has appointed a new chief insurance officer, Daniel Ignoto (pictured), to spearhead its growth in personal lines as it pursues technological innovation.

“It’s tough,” said Ignoto. “We’re seeing a collision of inflation with a real auto theft crisis in the country, [and] in Ontario specifically. With the current economy, it has been challenging for all customers.”

At the same time, Ignoto is optimistic about the tide turning.

“We believe that although rate increases have been steady, they will eventually flatten out,” he said. “The industry and government are working to address the theft crisis, but in the interim, we need to remain consistent and transparent for our customers.”

‘Transparent conversations’ about home and auto insurance

Ignoto has been tasked with aligning BIG’s personal lines, commercial lines, and life and financial divisions as the brokerage carries out its digital transformation. His role aims to ensure consistent governance, protocols, and robust relationships with carrier partners across all business sectors and to present a “comprehensive, trusted” brand to customers.

Speaking to Insurance Business, Ignoto said BIG and its brokers are having more “transparent conversations” with customers about the home and auto insurance market and offering alternatives amid a vulnerable period where many can’t afford the coverage they need.

“Wallet sizes are smaller, and unfortunately, people are cutting costs, often starting with their insurance premiums,” Ignoto said. “We’re having transparent conversations with our customers about why we’re taking certain actions as brokers. The benefit of a broker is that we can offer options and adapt to changing needs.

“These are difficult times for brokers, as customers often don’t understand how insurance pricing works and the cost of claims.”

Tackling a hardened personal lines market with AI and technology

One way BIG is addressing a challenging personal lines rates environment is through technology. Ignoto revealed that BIG plans to expand its personal auto insurance platform, Precision, to property insurance later this year, simplifying carrier submissions for brokers.

Ignoto explained: “The way we use technology ensures we are 100% consistent and accurate, creating clear expectations for our brokers. This clarity allows them to provide consistent delivery to their customers.

“Technology helps us handle repetitive tasks in personal lines, such as house, condo, tenant, and automobile insurance, which are relatively consistent products. Our goal is to be clear with our team about what’s required to submit business through any of our carriers.

“We have frameworks and guidelines to improve the quality of submissions, ensuring we fully underwrite and explore each customer’s risk accurately. Technology removes mundane tasks, allowing our team to focus on risk exploration and ensuring accurate ratings and underwriting.”

Ignoto is also keen on extending access to Precision to the West and East Coasts of Canada, alongside increasing investments in artificial intelligence (AI) and data analytics to enhance services across the board.

Earlier this year, BIG CEO Stephen Billyard told Insurance Business about the group’s generative AI journey and how cutting-edge technology had helped the organization streamline its workflow.

Ignoto is also enthusiastic about the promise of generative AI for improving the underwriting process and exploring new areas of opportunity for brokers. However, he emphasized the importance of having an AI policy to govern its use and prevent issues such as data breaches from unregulated AI interactions.

“We’re looking at different parts of technology and further embedding AI into our business models, whether it be from a performance management or analytics point of view,” said Ignoto. “But we are balanced in our approach because not everyone fully understands AI’s capabilities. Without an AI policy, employees might misuse tools like ChatGPT, potentially exposing sensitive data.

“Governance around AI usage is crucial, and it’s important to communicate with employees. Setting clear goals for AI prevents a shotgun approach that can be distracting and costly.”

Do you have something to say about Billyard Insurance Group and its approach to the challenges in personal lines insurance? Please comment below.

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