The Insurance Bureau of Canada (IBC) have released an Innovation Agenda for Ontario’s insurance industry. The report contains four excellent recommendations for the industry which miBroker fully supports.
- Allowing all insurance communications and transactions to be completed and delivered electronically if the consumer provides the necessary consent.
- Allowing insurers to provide consumers with the option of selecting usage-based insurance (UBI) to help determine the cost of their auto insurance.
- Integrating the sharing economy – specifically, technology-enabled ride- and vehicle-sharing services – into the auto insurance system so that insurers can offer new products to cover the risks that individuals face while using sharing economy platforms.
- Granting both incumbent insurers and new market entrants access to the regulatory super sandbox to encourage new innovations that will benefit consumers.
Conducting Consumer Transactions Electronically
Insurance laws are unclear about the validity of electronic copies of policies. Many brokers and insurers including miBroker issues electronic copies of policies, but must also send the paper copies to be fully compliant.
Worse, certain transactions are only permitted by mail, registered mail, delivery or personal delivery. This throw back is the result of provisions in the Insurance Act not having been updated when the Electronic Commerce Act was introduced in 2000. This puts insurance at a technological disparity with other industries like real estate. IBC is asking that Brokers and Insurers be allowed to conduct some of these transactions electronically and to adapt existing forms and applications to an online environment.
Electronic proof of insurance is something that many consumers would prefer. Many brokers provide electronic copies of proof of insurance, often these are acceptable to whoever is making the request like a police officer for example. However, technically only printed proof of insurance is valid. It could be requested at a traffic stop and insurers still have to issue the paper copies. This could be an easy fix. A bulletin could be issued by the Superintendent of the Financial Services Commission of Ontario (FSCO) to allow electronic slips. These are accepted in most US states and as of January 2018 Nova Scotia. Theres even an industry standard available through the Centre for Study of Insurance Operations (CSIO).
Option to Choose Usage-Based Insurance (UBI)
People want easy and flexible insurance products. Dynamic pricing is already used in many other industries like finance and banking. FSCO currently allows insurers to use UBI products to offer discounts like through Intact’s My Driving Discount product.
IBC would like to see FSCO go further with this and allow UBI products to set the base price of a policy. This would open the door to pay per use models, or pay per kilometre, which have already ben used in Europe and the US through insurers like Metromile.
This makes a lot of sense as people in cities like Toronto are driving less, and relying more and more of alternative modes of transport like public transit and ridesharing.
Integrating the Sharing Economy
The sharing economy and ridesharing specifically introduce complications into our existing insurance framework. Despite coverage being provided through the ridesharing service, drivers need policies with specific insurers to ensure their adequately covered. We’ve covered some of these issues in the past, and the IBC report goes into greater detail on issues like who’s accident benefits pay in the event of a claim.
An Accessible Regulatory Sandbox
Regulatory sandboxes allow insurers to test new products on real people on a limited basis. Aside from the obvious benefits of prototyping innovative products, regulatory sandboxes allow insurers to work on these projects with an eye to graduating into a regulatory framework.