Insurance industry needs reforms related to water damage

During the current volatile economic environment, the insurance industry needs to be more proactive in developing property reforms — in particular, addressing the increasing number of claims dealing with water exposure — to avoid political intervention like that seen with recent auto reforms, Kathy Bardswick, president and CEO of Co-Operators Group Ltd., told a crowd of delegates at the first A.M. Best Canadian Review & Preview Conference in Toronto.

As the insurance industry works through this volatility and continues to generate the returns that “we have only recently started to generate,” she said that she believes those returns will be under attack.

“For example, I think that one of the largest issues coming down the pipe is how well this industry responds to water exposure and the increasing frequency of storms,” she said. “My fear is that as the economics become increasingly volatile, the consumer expectations and confidence will become increasingly volatile in response…

“If the consumer gets jittery, and the politician gets jittery, and if we see increased exposure, and insurers excluding, denying or not responding appropriately in the eye of the constituents, then we will get knee-jerk reactions to the industry,” she suggested. To address the issue, she suggested the industry form a committee to develop a solution to be presented to regulators.