What Intact’s CEO thinks of Ontario’s auto insurance budget

Intact’s CEO Charles Brindamour said he is “quite thrilled” with some of the auto insurance reform measures contained in Ontario government’s proposed budget.

Brindamour commented on the budget proposals for auto insurance reform during a Virtual Fireside Chat with RBC Capital Markets.

Historically, as far back as 2016, the Ontario government has “done a pretty good job to keep the cost of automobile insurance in Ontario in check, because they’ve worked on the cost of the product effectively,” Brindamour said, when asked by Geoffrey Kwan, Canadian diversified financials analyst at RBC Capital Markets, for his assessment on how the Ontario government plans to achieve these objectives. 

The Ontario budget outlines the government’s most recent plan to reduce the cost of auto insurance by creating more choice in the auto product, cracking down on auto insurance fraud, and enhancing pricing fairness by changing the guidance for territorial rating.

Brindamour is pleased the budget lists proposed amendments for cracking down on fraud. Among them: “The government is proposing amendments to the Insurance Act that, if passed, would require insurers to provide fraud information to FSRA on an ongoing basis. This would hold insurers accountable for managing, tracking and reporting fraud.”  

Brindamour applauds  the government’s commitment to crack down on accident benefits fraud. 

“The Ontario product is the richest product across the land, and, as a result has been—over the past two decades—the portfolio that has seen the most [claims cost] inflation, because it’s rich,” Brindamour said.  

“There’s a lot of people, [let’s] call [them] car accident entrepreneurs, trying to take advantage of the product. As a result, our advice to the government has been, ‘You’ve got to stay on it. You need to keep working on the potential [cost] inflation in the system, because if you want the competitive forces to be all-out, you want to keep inflation under check,’ and that’s what they’re doing.” 

The budget document also notes FSRA is to develop a new framework for ensuring fairness in rates that would replace outdated guidance, including existing guidance on territorial rating.

Brindamour said he is “quite thrilled” with the plan.  

“Historically, to fight [auto claims cost] inflation, [governments] introduced all sorts of strange rules that you’d apply to pricing,” he said. “For instance, limit the number of territories to 55. We priced at the postal code level normally. I think they’re looking back at some of these archaic rules and make sure that companies can be full-out on risk selection that’s really based on people’s behaviour.”  

The budget also outlines the government’s plan to “increase consumer choice,” through efforts like making it optional to purchase not-at-fault property damage coverage (also known as Direct Compensation – Property Damage).  

“[In terms of] creating more choice, definitely the more the product is tailored, the better. Some people cover it at work; that they might not need automobile insurance coverage for these things needs to be better taken into account,” Brindamour said.  

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