While leaders from around the world met in Glasgow recently to discuss climate change, speakers at the Insurance Bureau of Canada’s (IBC) 2021 Regulatory Affairs Symposium said they want to ensure that positive steps are taken in this area, even though they acknowledged the issue is not something that can be corrected overnight. 

“We need a strong offence against climate change,” said Don Forgeron, president and CEO of IBC. 

“That means acting with urgency [to protect] lives and health and property from worsening weather events. The [federal] government has responded by committing to our key recommendations, suggesting that our message has been heard loud and clear. Our priority now is to keep the pressure on government to ensure they act in a meaningful way.” 

Severe weather 

IBC said earlier this year that the average annual cost of claims due to severe weather more than quadrupled over the past 10 years to about $2 billion. 

The federal government has promised to cap oil and gas sector emissions and at the COP26 conference in Glasgow, urged the creation of global standards when it comes to pricing pollution. Prime Minister Justin Trudeau said Canada is focusing on implementing the policies needed to meet its existing targets. 

The Glasgow Financial Alliance for Net Zero, an alliance of financial services companies that together manage about $130 trillion, said it was committed to transforming the economy to net zero carbon emissions. It has come up with 24 major initiatives they say are needed for the financial system to support this transformation.

Ryan Michel, president and CEO at Allstate and chair of the IBC board of directors, told the property and casualty insurers’ symposium that climate change must be looked at now to ensure the industry can meet longer-term issues. 

Pricing risk 

“We have to get the right price for the right risks,” said Michel. “Climate change is going to persist and if it’s going to escalate as the risk increases, we’ve got to make sure that we’re solvent for those risks going forward – which means we’ve got to get the right prices.” 

The industry also has to support ways to reduce the severity of climate change, he said. For example, the industry is contemplating whether to give special coverage to those who buy electric vehicles or vehicles that use alternative fuels. Critical will be how the industry invests its assets to drive the incentives in the long run, he said. 

Forgeron said IBC will also continue its advocacy role with regards to floods and earthquakes and expects policy announcements to be made next year.

But on top of climate-related issues, the industry also has a number of other concerns that are keeping companies on their toes. 

Reducing fraud 

One is the issue of fraud, said Michel. Using data analytics, the industry can determine where major frauds are taking place with the goal of eventually prosecuting the swindlers.

“The root of fraud to me is: what is the product? How do we increase innovation for customers and understand what they really value? Right now, our products are rich across the country, which gives opportunities for fraudsters to take advantage of the situation.” 

He said the industry is looking at finding ways to give consumers options on insurance packages which can lower the cost of insurance and reduce fraud. Michel added that there will be more information coming on this in the months ahead. 

Michel noted that despite COVID-19, the industry has been able to help lower costs for many clients in the forms of rebates, discounts and deferring payments, aided by regulators who gave the industry some flexibility. 

“Overall, I’m amazed at how much we did. When you add it all up, we made a huge impact: about $2 billion of relief. It really emphasized the creativity across our industry.”