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Insurance needs to adapt to new technology

Technology-focused investments are pushing business model changes across industries. With the continuous development of technology and its applications crossing traditional boundaries, insurance policies need to adapt to rising pressures of meeting new demands.

Insurance policies within the personal lines insurance value chain, including product development, client acquisition, underwriting, and claims are being challenged to update their policies as technology changes. Digital capabilities and the arrival of new competitors carving off pieces of the insurance value chain may well drive a significant restructuring of the industry.

Insurance needs to continue to adapt as technology advances. We will continue to provide information regarding technology and its relation to insurance developments.


Cyber security risk: malware designed to perform attacks on power supply infrastructure

ESET Canada Inc., an IT security company, reported that its researchers have been analyzing samples of dangerous malware capable of attacking a power supply infrastructure.

They have named this malware Industroyer and state that is was most likely involved in the December 2016 cyber attack on Ukraine’s power grid. This attack resulted in power outages for over an hour in the capital of Kiev.

This newly discovered malware is capable of directly controlling electricity substation switches and circuit breakers. It uses industrial communication protocols used worldwide in power supply infrastructure, transportation control systems and other critical infrastructure.

The potential impact may range from simply turning off power distribution, triggering a cascade of failures, to more serious damage of equipment.

Kiev’s cyber attack is a prime example that cyber insurance should be at the forefront of your business’ budget to protect your company from harm.


Banks vs. Insurers

Denis Ricard deplores the fact that the regulation imposed on banks is much more lax than that imposed on insurers. But who supervises the banks, dare he even ask?

There is the Ombudsman for Banking Services and Investments, but this organization has much shorter teeth than the panoply of regulators that oversee the insurance industry.

“The fair treatment of consumers is very important for our regulators. We are very much in agreement with that. But when we consider the weakness of the regulation of banks compared to insurers … Phew! There is nothing for banks,” says Executive Vice President, Insurance and Individual Annuities.


Tesla argues for setting premiums based on technology

The United States electric car manufacturer Tesla is in favour of pricing auto insurance based on vehicle technology that promotes risk reduction, says data analysis firm GlobalData.

“The exponential advances in technology have made drivers much more cautious, as the potential for driver errors is reduced when Tesla’s autopilot function is up and running,” said Daniel Pearce, a senior financial analyst. GlobalData. Collision rates for all Tesla models have dropped 40% since the introduction of the autopilot system. However, when owners wish to insure their Tesla, this is not reflected in the premiums. “

The automaker’s solution has been to partner with insurers in 20 countries to set up the Insure my Tesla program. GlobalData indicates that this program wants to offer insurance vehicle owners insurance products that reflect the increased safety offered by the technology included in their car.


What is the value?

Marc Cohen, who will be taking charge of the Hub International insurance brokerage firm on January 1, 2018, expects digital technology to play a major role in the transformation of insurance for both individuals and businesses.

The change will primarily affect the simplicity and ease with which the consumer will transact. “We will have to go through a multichannel approach. This will combine both the digital and a physical place around the corner. Technology and innovation will intertwine. It will look like what banks have experienced. The insurance must be delivered to meet the needs of the consumer. Innovation will come from the voice of the consumer.”

This new interaction will generate innovation, he says. But for that, brokers must innovate. Acting as the intermediary doer today will not be enough tomorrow, says Cohen.


Collision frequency continues to climb

Collision frequencies continue to grow at an overall rate of 2.5%, according to the Allstate Canada Safe Driving Study. In addition, the results of the study reveal that the most serious type of collision is that involving pedestrians or cyclists, followed by frontal collisions.

“It is certainly encouraging to see a drop in the frequency of collisions in some parts of the country. However, the overall frequency of collisions is on the rise, which we find all the more disturbing as the most serious collisions involve cyclists or pedestrians,” says David MacInnis, Vice President, Product Management at Allstate.

These results show that there is still much to be done to reduce the number of accidents, especially as we approach the most dangerous season on the road.


It is time to consider marijuana-proofing policy wording

An insurance defence lawyer is encouraging the industry in Alberta to check their policy wordings after the province’s proposed new sanctions for cannabis-impaired and cannabis/alcohol-impaired driving offences.

Insurance professionals will need to conduct an immediate review of all policy wordings in order to ensure that their insurance products appropriately cover the risk and claims that will come with the changes in the legislation.

The impact of the changes to the Traffic Safety Act will be far-reaching, possibly affecting claims in the homeowners’ personal lines and commercial general liability contexts, as well as for product liability and directors and officers liability.

Also, there is still doubt about testing for marijuana – impaired driving. We can expect there to be many initial challenges to impaired charges on the basis of the accuracy of testing


Are you prepared for the Digital Privacy Act changes?

For Canadian organizations, as well as organizations doing business in Canada, a dramatic shift to privacy and cyber security regulations is looming. The amendment to Canada’s Personal Information Protection and Electronic Document Act (PIPEDA), the federal privacy law for private-sector organizations, is expected to take effect in late 2017.

Under this amendment, also known as The Digital Privacy Act, organizations that experience a data breach but neglect their responsibilities as outlined in this act could quickly find themselves in hot water with regulators and customers alike, not to mention facing steep fines.

If you aren’t up to date on what’s happening with PIPEDA and The Digital Privacy Act, this article highlights the implications of the new regulations on businesses. Then ask your broker or insurance company agent about cyber insurance to determine if your risks are being properly managed.


How has Harvey affected global reinsurance rates?

Global reinsurance rates are likely to remain low despite Hurricane Harvey’s impact on parts of Texas and Louisiana. Reinsurance provides some of the financial capacity for insurance companies.

The main differentiator between Harvey and other devastating US storms is the amount of flood damage Harvey has inflicted. This has had considerable impact on economic and insured loss estimates.

There are a number of factors affecting the potential size of these losses. Underinsurance plays a big part on the personal lines side. Not many people take out personal lines flood insurance, so this area is likely to see higher economic losses than insured losses.

Despite Harvey’s significant size, Fitch Ratings is not predicting a huge impact on pricing. Harvey is not large enough to cause a widespread turn in pricing, so global rates are likely to remain low.


Here’s why you should pay attention to flood insurance

Flood insurance in Canada is in a state of flux. The Calgary flood of 2013 changed everything. Increased severe weather events across the country continue to shape the private flood insurance landscape.

At the National Insurance Conference of Canada, held in Quebec City the first week of October, a panel of industry experts sat down to discuss the state of the flood insurance market.

IBC consultant and former TD Insurance CEO, Alain Thibault, said there are still glaring gaps in the coverage offered. There’s no solution yet for high-risk properties and we don’t yet have the products that people need.

President of Direct-Line Insurance brokerage and past-president of the Insurance Brokers Association of Alberta, Gord Enders, said a potential problem was the point at which insurance would take over as the default protection, and when and how Government relief funds would cease being a “back stop.”

IBC vice president of federal affairs, Craig Stewart, said discussions between the IBC and Government continued, but more stakeholders needed to begin having a seat at the table. Mortgage lenders and realtors needed to be better informed and have a voice in the discussions.