Personal lines set to dramatically change, but will not disappear altogether: speakers at CIP Symposium

With the number of disruptors entering the insurance industry, personal lines insurance is set to undergo a dramatic transformation, but will likely not disappear altogether, speakers suggested Thursday at the 2016 CIP Society Symposium.

Catherine Kargas (picture below right), vice president of Montreal-based MARCON Management Consultants Inc., told conference attendees that she believes that personal lines auto is going to change “tremendously,” as mobility choices and ridesharing options increase.

“We have more choice and we’re being offered more choice that is going to end up costing a lot less than owning your own vehicle,” Kargas said during a session titled Dawn of the New Insurance Era. “There are tools, technology that is growing at this point where you are combining all sorts of technology together to be able to create a seamless integration of mobility that will allow people to get from point A to point B using multi-modal solutions that will cost you almost peanuts compared to owning your own vehicle.”

Another speaker, Alex Walker (pictured below left), assistant vice president, relationship management and ovation with Aviva Canada in Toronto, agreed that multiple solutions are possible, noting that some markets are bundling coverage into a personal lines policy. “So it’s very conceivable that you get to a stage where you have a personal lines policy down the road that incorporates your exposures to not only what you may have in your house – your jewellery, boat – but also when you are in a shared vehicle, the liability that arises from that,” he said.

Walker also agreed that personal lines auto will continue to exist “in some form or another,” noting that vehicles are already very expensive to repair, using the example of hailstorm and flood risks in Canada. “The manufacturer isn’t going to insure that vehicle for physical damage, so there will also be some sort of need,” he said.

Karim Hirji (pictured below right), senior vice president, international & ventures, with Toronto-headquartered Intact Financial Corporation, asked the audience what would happen from a manufacturer’s perspective in the case of semi-autonomous and autonomous vehicles. “You are going to see some manufacturers assume more of the liability; you’ve already seen some step up,” Hirji said. “They have experience in that space already through warranty insurance. You will see some work in an ecosystem with potentially other data providers and insurance companies. You may see some companies decide from a balance sheet perspective, it’s not the most efficient use of capital.”

Generally speaking, more semi-autonomous functions will take hold over the next five to 10 years, as well as “some kind of mixed transportation form” over the next 15 or 20 years, Hirji predicted. “But to think that we are going to have over 50% of the vehicles on the road being full autonomous without any driver intervention, I think is absolutely false,” he said. “I think it is going to take much longer than that.”

Asked Kargas: “Will we have shared, driverless, electric vehicles being a very significant part of our ecosystem within the next 10 to 15 years? I think so. I think they are going to be a tremendous percentage of the vehicles that are out there.”

Other options may include pay-by-the-mile insurance or ridesharing. “I don’t even think we are starting to realize how important sharing is going to be,” Kargas said. Millenials, Hirji suggested, “aren’t going to care. They want to get from point A to point B. They don’t want to own an asset, they just want to get there the quickest and cheapest way possible. It could be Uber, it could be a bus, it could be a taxi.”

Kargas said that some governments or agencies are already creating an environment where people don’t need to own their own vehicle. She pointed to the government of Finland, which originally said that they want to create such an environment by 2025, then updated the target date to 2020. “Why? Because we will provide all mobility solutions to the point where they become so easy and attractive” and economically viable, she told attendees. “There are cities around the world that have started to say you will not enter the city with your own vehicle. You are going to have to use active mobility – bicycle or your own legs – or you are going to have to enter through a shared mode and this is coming into Canada.”

Here in Canada, Kargas said, there is a company that is “about to enter the Toronto market within the next few months with the help of the [Toronto Transit Commission] doing real ridesharing in the sense that you and I seem to be going in the same direction, there is not transit in that area, let me help connect you with somebody else who is also going in that same direction and we can maybe put two or three people in that vehicle as opposed to only having one.”

“There is certainly an opportunity from an insurer and broker perspective to sell a product that will provide insurance to somebody who is not a motorist,” Kargas said.