INSURANCE BUREAU OF CANADA
IBAS met with IBC at the beginning of day, which helped us better understand some of the macro trends in the insurance marketplace and frame our questions for the remainder of the meetings. One of IBC’s most significant strategic priorities is addressing key challenges related to catastrophic loss — most notably, in Saskatchewan, overland flooding and wildfires.
According to IBC, out of 8.6 million homes in Canada, 1.7 million are at-risk for flooding, and 800,000 face a 70% or greater chance of flooding over a 25-year mortgage. IBC continues to lead a national working group alongside the federal government, IBAC, and other stakeholders, with the goal of producing a set of recommendations later this year that will help improve information sharing and reshape disaster assistance programming.
IBC also provided an update on the two-year anniversary of the Fort McMurray wildfire. Approximately 2,500 homes were lost in the blaze — 500 have been rebuilt and have completed final inspections, 1,500 are in the construction process, and 500 have been approved. While the two-year limitation has now lapsed, insurers and IBC went beyond the requirements and worked with the Alberta government to provide a one-year extension to help resolve the remaining outstanding claims. It is worth noting that IBC’s consumer information hotline received 6,500 calls in the first year after the fire.
2019 will be the company’s 125
year in Saskatchewan, and coincides with a major cultural change and new vision statement:
People first, on purpose
. Farm continues to be MyMutual’s core market, representing 45% of its book of business. The company writes in 102 locations, including 70-80 in rural Saskatchewan.
The year ahead:
MyMutual is continuing its work to have new broker-facing software integrated in real-time for January 1. It will also be moving toward electronic policy documentation and will be focused on introducing specialized coverages unique to its target market.
With the forthcoming legalization of marijuana, MyMutual expects wordings to remain the same, with a total prohibition on all plants. To keep aligned with the firm’s reinsurer treaty, brokers will need to know upon renewal if policyholders require marijuana medically or expect to grow when legal.
Aviva Canada is seeing an upward trend in broker market share where technology is a major customer focus (for example: personal lines in Alberta). The company’s Digital Marketing Consultancy (DMC) recently presented at the Insurance Brokers Association of Alberta Conference in Banff to help brokers learn to adopt more sophisticated digital presences as the industry races toward artificial intelligence and e-commerce.
Aviva says 99% of its business in Saskatchewan, Alberta, and Manitoba is still done through brokers. It currently has $300 million invested with brokers across Canada, either in an equity position or in financing, and has a 100% ownership stake in brokerages of speciality products, including hole-in-one coverages and recreational vehicles.
The company added that it strongly prefers to roll overland flood coverages onto entire existing books of business in lieu of adopting a business model that sells coverages separately.
Supporting broker tech:
SGI CANADA is continuing its technology focus as it moves to better support brokers through real-time Data Exchange (Dx), assistance with customer segmentation, the supply of APIs, as well as small business loans and other licensing solutions to small brokers, with an aim at improving technology adoption. Premium-wise, 10% of SGI’s brokers do not have a BMS.
SGI recently converted a loan into a $3 million, 15% equity stake in Nuera — a technology-centric Alberta brokerage. This required special Government of Saskatchewan approval; however, SGI is working to finalize a more permanent investment protocol. It’s ongoing investment strategy remains focused on supporting digital brokers or brokers to become digital. Representatives added that SGI is committed to being 100% delivered through the broker channel, and that clear government direction would preclude the company from making investments in the province that would compete with Saskatchewan brokers.
SGI is anticipating a long-term decline in auto insurance premiums over the next 5-10 years. It is also working to adapt to pot legalization. Generically speaking, SGI’s policies will not preclude activities related to marijuana so long as the uses of that substance are legal.
WYNWARD INSURANCE GROUP
Strong and growing:
Wynward has been around Saskatchewan since the 1930s, and now has 160 brokers in the province, including 95 in rural communities. Since being wholly acquired by the Richardson family, the company has doubled in size over the past six years, with $100 million in annual top-line revenue.
Go where the growth is:
Wynward is aggressively moving to provide insurance solutions to businesses across the spectrum of legal marijuana operations, from seed to sale. Expect to hear more on this in the coming weeks.
The company restated its commitment to being 100% broker-delivered, with no direct arm and no ownership in individual brokerages (although, for the first time, it will consider broker financing opportunities). Its representatives also said Wynward is committed to paperless policy distribution and to not using a broker portal for transactions.
RED RIVER MUTUAL
Building on strengths:
Originally founded as a farm mutual, Red River Mutual plans to double-down on the market it knows well, specializing in commercial farm operations and farm policies that cover the diversity of business activities encompassed in ‘non-traditional’ farming — for example: trucking and snow removal.
The company plans to launch its partnership with Guidewire in 2019, integrating customers upon renewal. It will continue its technology push through 2020, with the additional development of new, broker-facing solutions. Roughly 15% of Red River’s brokers currently do not have a BMS.
The company’s policy will be to support the legal, residential sale and production of marijuana.
Intact Financial Corporation currently writes north of $8.7 billion in business. In Canada, more than 72% of business is distributed through the broker channel. Its direct sales arm, belairdirect, has no immediate plans to enter into Manitoba or Saskatchewan.
The recent launch of Contact PL in Ontario has improved the broker experience by helping to alleviate duplicate entries, and offering faster connectivity. Its Client Centre, meanwhile, allows customers to have online access to their policy documents and track the status of claims.
Global conglomerates like Google and Amazon potentially penetrating the local insurance marketplace is a significant concern for insurers and brokers alike. Intact views these disruptors as the primary risk to their business and the businesses of brokers. The company contends that investments in broker technology, such as Contact PL, will be paramount to ensuring brokers remain competitive in an ever-changing marketplace.
Wawanesa reinforced the importance of the broker channel, with representatives saying the company had no plans to use its direct sales arm outside of Quebec and the United States, where it exists only in response to unique challenges in those marketplaces. The company also maintained its strong stance on keeping its insurance and owned-brokerage operations distinct and separate.
Wawanesa is striving to be a national and regional leader in product development. It was first company in Canada to launch a personal cyber risk policy.
Wawanesa has established an Innovation Lab in Winnipeg to focus on enhancing the company’s R&D of new technologies. It’s also a member of the Guidewire program, which it hopes to launch in November 2018. Following that, Wawanesa looks forward to rolling out its Blue Pass broker-consumer portal, and then completing full broker integration, which will enable real-time policy transactions for brokerages.
Opportunity to grow:
Travelers Canada currently works with 15 brokerages to write a small but profitable portfolio in Saskatchewan focused primarily on small and medium commercial, E&O, D&O, and cyber risk coverages. Company representatives expressed a desire to enter the habitational insurance market in Saskatchewan at some point in the future, dependant on a significant desire, support, and commitment from local brokerages.
Company reps were asked to comment on what adds value to the broker channel. They highlighted the need for independence, the ability to attract young professionals to the industry, and ensuring diverse portfolios in relation to both the number of companies that brokers represent as well as product mix.
Travelers Canada has invested substantially in technology and has recently partnered with Guidewire. While this doesn't currently affect their business in Saskatchewan, it positions the company well for future growth in the province.
SASKATCHEWAN MUTUAL INSURANCE
Small and rural service:
Approximately 53% of SMI’s market is rural, while 21% is situated in smaller cities. The remaining 26% of brokers are located in Saskatoon and Regina. SMI recognizes that some of the smaller brokerages are unable to invest in a BMS, and highlighted a desire to work with them as they look to onboard new technologies.
While it wasn’t the first company to enter the flood insurance market, SMI pointed out that their product has been very well received. Due to its size, this is the model they look to emulate in the future — not necessarily taking the lead on the development of new insurance products, but taking the time to consult and respond to the individualized needs of consumers in the local market.
Like many other insurers, SMI is unsure how much uptake there will be by individuals to legally grow marijuana in their homes; however, the company has updated its habitational wordings in preparation for the new legislation. But it has no plans to insure commercial producers and dispensaries.