NICC - National Insurance Conference of Canada’s Post

Transcript

And now we have the Celeste Power, who is the CEO and President of ICBC, the insurance Bureau accounted, joining us to sit down and talk a little bit about some of the things you're seeing here, but also what you're seeing from the viewpoint of IBC, that sort of overreaching industry association that kind of provides a lot of guidance to everyone down through the insurance ecosystem. So, so let's get into the easy one first. The political climate right now, I don't think we've ever had a time in Canadian. Political history where we've had the strangest of bedfellows that we see depending on the week and the the threats of shutting down government to to force an election. How does this affect what you guys do from an advocacy standpoint and, and other initiatives that you deal with? Yeah, it certainly has a big impact when government has a lot of things on their radar that they're paying attention to. We have to work a lot harder to get them to pay attention to the issues that matter to our industry and to our customers. So right now, for example, we saw a $7 billion worth of. Names over the span of two months this year and what we're finding as I'm going around and talking to different governments, people are desensitized to it. They're not, you know, it's not top of their radar while we have hundreds of thousands of Canadians that have been impacted by it. And so we do have to work a little harder in these busy political times to get that attention there and make sure that, you know, we're getting that message through so that they're paying attention to those issues that matter to Canadians. Flood and quake are two of those big issues that you guys have tackled for some time now, do you think? You know, a pending election, maybe even a change in government, could that change how you approach those two major topics for Canadians? Yes, certainly. I think overall, we have been advocating to the federal government for over a decade to set up a national flood insurance program and have an appropriate earthquake resolution, along with investing in climate adaptation. So we're seeing the impacts of our changing climate. They're hitting our communities hard. We need to be making the right decisions to not build in floodplains, to upgrade our building codes. To, you know, building dams, to making sure we're fire proofing things. And this message has been something that we've brought to this government for the last 10 years. Over that time they've invested about $1.9 million in climate adaptation. That is less in a decade than we have paid out for one single event this summer. And so we really need to get that message through. And so with change comes change. So if we are seeing the political tides change, we will be looking to engage all decision makers, regardless of the party and in a way that makes sense to them. And the way that it makes sense to any government is through how does it impact my voter? How does it impact the Canadian? And luckily for us, all of our requests of government do have a very big real impact on Canadians. If we look at the Calgary Hill Storm, you know, over $2 billion worth of damage this summer, a lot of those homes are ones that insurers have already prepared from a hailstorm two years ago, three years ago. So how do we make better decisions about where we're putting people and the materials we're using? Well, we're going to have that message for all political parties. Regardless of Stripe and you know, we're hoping that we'll see more traction with whatever government forms next because we need to start treating our changing climate like the crisis that it is today and not the one that we're going to be fighting in the future. And obviously, we know changing climate is affecting access to insurance in lots of places around the world, particularly to our friends South of the border. I'm sure you have a lot of relationships with associations down there and some of the problems they're facing. So let's touch a little bit on that claim in government relations. Because yes, you have to act federally, but you do need to think provincially and municipally. How does that work for IBC? Because it's the municipalities that are sort of opening U those floodplains or those those watersheds or things like that, or those beautiful areas that we all want to live on that actually we need to deal with their climate change. How do you integrate there? Well, This is why it needs to be a whole of society approach. Not one stakeholder in this can fix this problem on their own. The insurance industry has to play a role, the customer has to play a role, the homeowner. The municipal government and the provincial government, but they, we need to be working as one right now. We're finding that there's a lot of well know it's a federal problem. Well, no, it's municipal problem. It's a preferential problem. It's all of our problem. So how do we come together as one with a good plan? The federal government released a national adaptation strategy with real targets on how we can build more resilient communities. They did that in 2022. It's yet to be acted on. It's yet to be implemented and that needs to be implemented not just by the federal government, but provincial and municipal governments. How do we come together and rally around a plan, doesn't need to be that specific plan, but a plan. And that's why we have been calling on governments to, you know, stop the finger pointing. It's not the time for that. It is actually the time right now to focus on solutions. Governments did a great job on this with auto theft. They came together. They didn't say, OK, this is a federal problem, this provincial problem. They came together. We saw federal government act, we saw provincial governments act, and we saw law enforcement and insurance industry Act. And what are we seeing? A reduction in auto thefts? Absolutely. Yeah. So it's not until. We get to that point of, OK, this is a crisis and we all own part of the problem until we're going to see some of that action. And we're really hoping that this summer is, is that spark that we need to see to get people to get to that .4 cat losses for cat losses of $7 billion. That's the largest in Canadian history. And that's just in the summer. We still have 1/4 left to go of this year. Now, you're hearing a lot of that message at the conference at Nic right now, and you're hearing that that you know there's going to be. Organizations reacting like yourselves, what are some of your short term goals to partake in that process like what we're from what we're hearing here. So certainly short term we need, we are hoping that the federal government, social leadership, they've made a lot of great announcements, announcements on this national adaptation strategy. They've committed to doing a flood program, but it hasn't yet adequately been funded and they committed to looking at the need for earthquake resolution. These are great commitments. Now we need action from those and we're hoping that we'll see our provincial. Invisible governments come around to saying, you know what, we should actually work with the federal government on this because it's in the greater interest. I worked in politics for years and there's often a lot of inter, you know, federal, provincial tensions and and whatnot going on. But again, I think we need to move past that now. This summer is such an incredible reminder of how devastating our changing climate can be. And so we need to move past that to the other, the other side. So keeping on the the events that happened this summer, how does that have an effect with the regulatory framework? That all insurers are operating under when it comes to reserves and all the different dynamics and say, hey, we have to have, you know, we can't keep paying out 7 billion + a summer, let alone the rest of the year in these cat losses. How are you addressing those issues? Well, so you know, thankfully the, the insurance industry is well capitalized for these types of events. This is what we unfortunately plan for. And while this is worse than we've seen before, they're the capital is certainly still there to be able to respond to it. But you also have to think that. We're talking about the risk level. We're seeing the risk level increase. And so when doing that, we have to price for that risk going forward. And the best way to keep insurance affordable and available is by mitigating that actual risk. Again from the homeowner to the municipality, the federal government, we need to mitigate that actual risk. And so I think we want to see from our regulators and from our governments a real recognition of that. If we want to keep insurance affordable and available, we need to reduce the risk that the homeowner is facing. But we were just listening to Superintendent. College and you know, it's been a very, very busy regulatory environment from OSPI, you know, in our provincial regulators and and the Cir. recently as well. And at a time when we're dealing with 228,000 claims from two months, that's a 406% increase in claims that we've seen over the last 20 summers. We're hearing from our regulators. Well, we're not stopping on the risk. You know, the regulatory risk environment. We're not gonna slow down. We're not gonna do anything. At the same time, we're hearing from companies that this is registering on the risk writers now as regulatory environment is a risk that they are managing. Do we have that balance right? That would be my question for the Superintendent. Do we have the balance right that like now is the time to be going all out on, you know, I think we're doing over 40 consultations on regulatory environment while trying to service 228,000 claims, while trying to be more innovative for our customer, while trying to find ways to reduce the risk that they're facing. I'm just not sure we have that balance right and we need that recognition. And the regulatory environment is very fragmented and you have provincial regulations, you have provincial legislation that governs the regulations. Regulators who don't agree on where their legislation sits with each other, and you made a point there that you're dealing with insurance and they have expectations about the experience, how they want to buy insurance, how they want to access it and use it. And a regulatory environment that is not up to date or, or modernized and understands the needs of industry is only going to put the people who rely on the regulator, the regulators want to protect further behind. You know, when you think about all those. Different levels you know, is there a path forward that is allows for change but isn't necessarily full throttle. I think that's exactly it I think you know I recognize that OSHA and the other regulators they have the duty to you know to look into these types of things absolutely need to do it but the question is do we need to do it all right away or can we look at what are the most important risks that are facing the insurance industry and let's make sure we focus on those and they can do the same thing with banking and the same thing with life goes but those are not all the same that. To everyone, so a good example of this is they were consulting on crypto for a while. That's an important issue. That's an important risk for the banks, less of an important issue for us. Do we need to be putting the time and effort into that or should we be prioritizing, you know, taking a bespoke approach to regulation where that matters? And moreover, provincial regulators, you know, they meet around the Canadian Council of Insurance regulator table, but we need to be having the federal regulator and the provincial regulator engaging, you know, if the federal regulators like I'm planning 30 consultations next year, well then when we talk to the provincial. I was like, I'm not sure if we can take 10 each from all of you. Like we're just that's very constrained and resourcing that conversation should be happening not just between IC and the regulator and our members and the regulator, but between the regulators themselves as well. We really just want to focus on what our customer needs and we want to do that of course in a risk environment that makes sense from a regulatory perspective, but we need to find that balance for how much time and effort industry is expected to be putting into sort of the regulatory consultations and you know, new compliance and then also. Time into innovation, you know, customer support, claims handling and so forth. One final thing, Slash, you talked a lot about the different regulators and stuff. 1 push we're also seeing from provincial regulators and Fisera, notably in Ontario, is trying to understand the role of Mgas and where they sit in the marketplace, what their purpose is, what their delegated underwriting authority is and the role of the insurance company partners have for them. Where does IVC sit with that? So typically distribution is not something that IBC would work. You know, on a lot, you know, the brokers and agents association, MG association will work on that. But we do have a keen interest in seeing where this goes because at the end of the day, we want to make sure that if there is any regulation, any guidance coming, that it's balanced between where it sits. You know, the insurers have a duty in some areas, but also the MGA's have a duty in some areas, the brokers have a duty in some areas. So we just want to make sure that there's a balanced approach taken with that. But moreover, we're talking about regulatory burden. And so the OSPI is doing an MGA review, Pfizer is doing an MGA. Review. BCFS is doing an MGA review, AMF is doing an an MGA review and now the Cir. the Canadian Council insurance regulators who represent 4 out of five of those folks are now doing an MBA review as well. Is that the right use of our resources at this point? That's, that's a question I have. I know I'm sure it'll be interesting at The MGM # today. So I thanks so much for sitting down with us and sharing your thoughts and giving some guidance about where IBC is and what you see here and, and a lot of the speakers and content coming forward and enjoy the rest of the event. Thank you so much. It was an awesome interview, Pete, and we're rolling. We've got way more coming on. Yeah, great guests. Thanks to Accenture for having us out here. And remember, check us out on the Insurance Podcast wherever you download your podcast.