At the 2018 Insurance Brokers Association of Ontario (IBAO) annual convention, there was much to discuss. During the 98th edition of the convention, topics ranged from autonomous vehicles, flood insurance, to cannabis legalization. However, there was no escaping the elephant in the room, the dire situation of the Ontario auto insurance market.
Attendees were also introduced to the incoming new president of the IBAO, Jeff Gatcke. During his address brokers, Gatcke tackled some of the core issues facing Ontario’s insurance industry.
“Our financial environment, currently one of low interest rates and easy access to capital, has made Ontario brokers the centre of many mergers and acquisitions. This is nothing new, and if I could read that hazy crystal ball I’d suggest mergers and acquisitions aren’t going to end anytime soon,” he said. “Many of our fellow brokers think we’re losing our independence as a channel. Some see insurance companies’ investment in our brokerages as our ultimate downfall. Our industry certainly looks quite different than it did five years ago, and I’m going to go out on a limb and say it will look quite different five years from now.”
Speaking later with Insurance Business, Gatcke and current president Colin Simpson talked about how the IBAO is helping brokers prepare for changing industry conditions. The message was clear, the biggest challenge facing brokers in the province is the broken auto insurance system.
“A lot of our issues in the marketplace right now are just about the market turmoil in Ontario auto, so we’ve been doing a lot of work with the various insurance companies, the regulators, and the different bodies that are impacted by this,” said Simpson. “[We need] to make sure we all have a full understanding of what the consequences are of some of the decisions that the rating ultimately delivers into the marketplace. We see the insurance companies not getting the rates that they’re looking for and it changes their work practices, which obviously knocks on to our members, so a lot of what we do is try and explain to our members what we’re doing about that.”
Auto insurance premiums in Ontario remain high, especially in the Greater Toronto Area, where motorists pay more than any other in Canada for coverage. Over the last month, there have been two proposals to end territorial rating assessments for car insurance in Ontario.
Insurance companies use location as a critical factor in determining the price motorists should pay for coverage. Some politicians believe the system is unfair as a customer may pay more for coverage simply based on where they live.