The first priority for the Insurance Brokers Association of Ontario

Reforming auto insurance is top of mind for Jeff Gatcke, the new president of the Insurance Brokers Association of Ontario.

“Our Number 1 priority would be working with insurance companies and the government on changes to the auto insurance product here in Ontario that I would say are sustainable and in consumer’s best interest,” Gatcke said of IBAO in an interview.

Gatcke, a broker with Earl Shaw Insurance Brokers Ltd. of Kingston, took the helm of IBAO Jan. 1, replacing Brian Purcell, how is now chair of IBAO.

With auto, one of IBAO’s concerns is rates. As it stands, insurers cannot change their rates without getting permission from the Financial Services Commission of Ontario.

The FSCO rate review process is making it hard for some carriers to make money on auto insurance.

“If insurance companies can’t get [adequate] rate in one line of business it certainly puts pressure on other lines of business like personal property and commercial,” Gatcke said.

The Co-operators Group Ltd. reported this past April it is difficult to get approval for adequate rate increases. The Co-operators made that comment in a report on its financial results for the first three months of 2018.

Waterloo-based Heartland Farm Mutual Inc. is in the same boat.

“We need to make sure we have adequate rates and right now we are quite far from this,” Heartland president and chief executive officer Louis Durocher told Canadian Underwriter this past summer. “I don’t think we should have to get approval before we can proceed with new rates and [underwriting] rules.”

The Progressive Conservatives were elected this past June with a majority, replacing the Liberals, which had been in power since 2003.

“The government has been pretty quiet on what they plan to do to maybe change or revamp or revisit what the product actually is so that it could be priced accordingly,” said Gatcke.

The government did say, in its Fall Economic Statement, that it plans to conduct a review – with the Financial Services Regulatory Authority – of how auto insurance rates are regulated.

The Ministry of Finance launched Wednesday an online survey, inviting the public to share their views on auto insurance.

Respondents are asked to what extent they agree or disagree with several statements – for example, “my insurance policy is easy to understand.”

FSRA – which is not up and running yet – was created by the previous government to replace FSCO.

“It certainly seems like FSRA’s mandate will be to implement something that is more time-responsive,” Gatcke said. “How that looks? We haven’t been given any indication yet but it looks as if FSRA is being given a broader mandate than FSCO had.”

Insurance carriers hope that when FSRA takes over auto insurance regulation from FSCO, “there will be more flexibility” in adjusting auto insurance rates,” Pete Karageorgos, director of consumer and industry relations for Ontario for the Insurance Bureau of Canada, told CU earlier.

Insurers have cited advances in vehicle technology as one major factor in that affects claims costs. The cost to repair a late-model vehicle tends to be more expensive than the cost to repair an older vehicle in the same collision.

“As the vehicles are getting more and more complex – with more technology implemented in them – the cost of repairs are going up,” Gatcke said.