3rd Top Story of 2020: Why it matters that insurance is declared to be an “essential service”

The insurance industry will continue to operate as an essential service after Quebec and Ontario issued orders for many companies to close their doors due to the COVID-19 pandemic. And that’s a relief for consumers, brokers and insurers, say industry leaders.

Governments in both provinces issued shutdown orders Monday, with Ontario’s to start at 11:59 p.m. Tuesday and Quebec’s at 12:01 a.m. Wednesday. The orders are in support of “social distancing” policies designed to slow down the spread of the novel coronavirus in the two provinces. Businesses that are able to work from home are not affected by the mandatory closure orders. Insurance is on a lengthy list of services deemed “essential,” including grocery stores, taxi services, and hardware stores.

And that’s good news for consumers, brokers, and insurers, say industry representatives.

For example, large brokerages process claims, including issuing cheques, noted Colin Simpson, CEO of the Insurance Brokers Association of Ontario (IBAO). “So, if a broker is considered non-essential, and they are no longer allowed to operate in an office, that may prevent certain brokers from putting money into consumers’ hands when they most need it.”

People who have been displaced by fire or flood still need to get money in order to pay for basic living expenses. “The only way you can do that is by running cheques through whatever office, whether it’s an insurance company, or whether it’s a brokerage,” Simpson told Canadian Underwriter. “It’s the process that’s essential, not the actual business, so you have to protect the essential services.”

Brokers are often that first point of contact for customers. Simpson spoke of a recent situation in which someone had a fire in their home. His first call was to his broker, “because the broker is local,” he said. “Consumers don’t necessarily have relationships with their insurers.” As it turned out the man did not have an internet connection, and so he had to give the details of the claim in person at the broker’s office. If the brokerage office had been shut down because insurance was not considered to be an “essential service,” the customer would have been left in the lurch.

“Certain services, and I can’t emphasize enough that it’s the services – not the business or the whole industry – need to be regarded as essential,” Simpson said.

Because the general public doesn’t quite understand how the insurance industry works, some people may wonder why it needs to be deemed essential, Simpson pointed out. “So we got very active yesterday, reaching out to MPPs, to explain this while all of this came out last night. We worked with IBC [Insurance Bureau of Canada], insurance companies and the regulators to make sure that they understood that.”

IBC echoed the need to ensure the industry remains an essential service on every government’s list so that business continues to operate as normal for customers. “IBC is reaching out to provincial governments in other provinces to ensure that insurers and those in the insurance supply chain are deemed essential should other provinces mandate closures,” said Steve Kee, director of external communications at Insurance Bureau of Canada.

“As this is an ever-changing situation, IBC continues to have discussions with contacts at all levels of governments to get a sense of any additional decisions that may be coming in the near future,” he added.

In the event of a flood, for example, the industry has to respond quickly. “If there’s potential mold, and mold grows exceptionally quickly, the people might have to be removed from their home, and we’re all supposed to be self-isolating at home,” Simpson said. “So the ability to move people, services and responses is critical in this type of environment, so we can get people who need the help the type of help that they need.”

Media organizations are also included on the list of essential services. That means Canadian Underwriter will continue to bring you daily news stories on our website, through our newsletter and on social media channels. Newspaper printing facilities are allowed to remain open as well, allowing us to continue delivering Canadian Underwriter print issues.

The closure of non-essential companies will last for at least 14 days in Ontario, while Quebec closures will last for three weeks.