Canada’s P&C professionals sound off on auto reform

Almost 70% of Canadian property and casualty insurance professionals describe the need for auto reforms across the country as either “very urgent” or “urgent,” but they don’t believe provincial governments share their sense of urgency.

Canadian Underwriter polled more than 340 industry professionals online today. Only 17% say the chances are either “likely” (12%) or “very likely” (5%) that provincial governments in their area will introduce some kind of auto reform package over the next one to two years.

“Continuing to tinker with the product is not best solution,” one P&C professional laments in the survey. “Government does not have appetite to look at serious reform. It’s a political nightmare for them.”

Nationally, just over half (52%) of the survey respondents say their provincial governments have attempted some type of auto insurance reform sometime over the past year or two. Generally speaking, however, provincial auto insurance reform packages introduced thus far haven’t been enough to drive down insurers’ claims costs or deliver better value for consumers, CU’s survey respondents say.

Across the country, almost 57% of industry professionals surveyed feel their province’s latest auto reform efforts have either been “ineffective” (30%) or “very ineffective” (27%) at delivering better value to consumers.

The breakdown is roughly the same when P&C industry professionals were asked if the provinces’ past efforts at auto reform were effective in reducing insurers’ claims costs. About 62% said their province’s most recent attempt at auto reform was either “ineffective” (38%) or “very ineffective” (24%) at reducing claims costs.

Echoing other survey respondents, one respondent thinks governments shouldn’t be leading auto insurance reform efforts at all.

“The government should stay out of it completely,” the industry professional writes. “Leave it to the insurance companies to devise the product appropriately. Everything the government touches breaks and clogs the system with poor results.”

Related: How Ontario plans to reform auto insurance

Several responses suggest government auto reform packages aren’t addressing the true root cause of auto insurer’s claims costs.

About 52% identify physical damage (auto repairs, parts prices, etc.) as the main source of auto insurers’ claims costs. Next comes accident benefits costs (37%), followed by liability costs (30%) and then auto insurance fraud and theft (20%).

“Reforms directed at auto insurance itself are utterly meaningless,” one P&C industry professional says, when asked to rate the effectiveness of provincial reform packages. “The rising cost of auto insurance is a result of what insurers are paying for — theft, towing, vehicle storage, repairs, actual injuries, fraudulent injuries, accident injury lawyers, pseudo-medical treatments, psychologists, etc.”

To that end, another survey respondent says successful auto reform efforts require a national approach.

“Dealing with each province individually is ineffective,” the insurance professional says. “The issue with auto insurance is a nationwide issue that cannot be handled by the insurance industry alone. It needs to be addressed by numerous sectors within Canada. These sectors range from provincial and federal legislation to judicial-criminal, tort and AB [accident benefits], police force and transportation (railway and ports), just to name a few.”

However, CU poll results suggest little stomach for a national auto insurance product. Only 31% feel auto insurance should be a unified, national product, while 53% believe the auto insurance product should vary by province.

British Columbia is the notable exception to CU’s polling trends. The province completely overhauled its auto insurance product in 2021, when the NDP government introduced a new, no-fault auto insurance regime allowing tort litigation for only the most serious of injuries.

CU poll results show B.C. is the only region of the country where a majority (71%) of P&C professionals in the area think past reforms effectively reduced claims costs for auto insurers.

Feature image courtesy of iStock.com/AerialPerspective Works