By: Luke Jones, Published on February 20, 2018 11:44 AM, Last Update on February 20, 2018 08:50 AM
Red tape restricting insurance companies from pricing usage-based insurance pricing (UBIP) dynamically is stifling innovation, the Insurance Bureau of Canada (IBC) said this week. Speaking to Canadian Underwriter, the IBC said restrictions could be lessened to push more innovations, such as Ontario not allowing companies access to services like UBIP.
IBC director of media and digital communications, Steve Kee says more must be done to open regulations to help customers. IBUP allows the price of auto insurance to be assessed based on how a person drives. Usage-based coverage has become popular in many countries and outright successful in major market like the US, Italy, and UK.
Under the UBIP model, drivers are awarded with discounts and lower premiums if they are good drivers. Telematics or handheld devices are used to tell insurance companies how a driver behaves behind the wheel, including speed, distances travelled, how often the vehicle is used, and more.
The Financial Services Commission of Ontario (FSCO) restricts UBIP use through Bulletin No. A-16/16, including ways in which consumers can participate in UBIP. Insurers also face red tape over data collected through a telematics device.
Insurer UBIP filings must include:
“If an insurer determines that any of the criteria initially used to determine prospective pricing need to be changed, the insurer may be required to re-file the UBIP model with the necessary adjustments,” the bulletin notes. “For example, if the majority of participating consumers see no reduction in premiums during the early terms, the insurer may need to consider whether the rating variables need to be recalibrated (for example, rating variables such as speed, acceleration or deceleration rates).”