For decades, there hasn’t been much personal property insurance regulation by the Canadian government, insofar as things like pricing and underwriting are concerned. However, there has been a significant shift in recent years toward greater regulation of the insurance industry, and it could be that this sector is no different. While nothing is guaranteed at this point, industry experts agree that something may happen in the near future.
Industry insiders have recently begun to speculate how the regulatory market will shift in the next year or two, because they see which way the wind is blowing and don’t want to find themselves hit with major oversight and potential changes, according to a report from Canadian Underwriter. As such, some are advising the industry to start doing more to explain to consumers the potential risk they face related to property they are insuring.
How likely is more regulation?
According to the report, this is an issue, however, that has been looming in the industry for some time now. The major flooding that hit southern Alberta a few years ago did such considerable damage that many residents necessarily saw their premiums rise sharply. It was around that time that the hew and cry came for more safeguards to protect consumers from such increases. Calls for regulation increased again when an ice storm followed soon after.
“Given the trends in the market place, it makes sense for insurers to prepare for greater regulation right now,” stated Nick Kidd, CEO APRIL Canada. “It only needs another major weather incident impacting large urban areas and the industry will likely face increased scrutiny to protect consumers.”
However, it should also be noted that those in the industry are perhaps understandably wary of the shape of potential regulation, the report said. For instance, many other industries have seen added costs as a result of regulatory changes, and that necessarily has to be passed on to policyholders in the form of higher premiums if insurers want to keep achieving financial success.
At the same time, though, most experts tend to agree that these changes are anything but inevitable. With this in mind, it might be important for insurers to do all they can to make sure they are as transparent as possible and help consumers to better understand their coverage options going forward. In this way, the entire property insurance industry can become healthier.