Policy issues

New technologies

In Canada’s insurance sector, consumers are using the Internet more and more for research purposes, for online quotes, to compare prices and to buy insurance. More than half of all consumers are using the Internet as their preferred method to research insurance products. Sales resulting from online quotes are increasing as a percentage of overall sales.

For direct relationship insurers, online interaction with customers has become a significant part of the business. The growing sophistication of online transactions and use of mobile devices has allowed companies to respond to consumer demand for convenient and accessible service.

As electronic commerce thrives and evolves, CADRI believes:

• Consumers should be able to compare and access insurance products that meet their needs using the delivery channel and mode of interaction of their choice. 
• The regulatory framework should focus on the quality of consumer outcomes regardless of the mode of interaction or the delivery channel. In this regard, we advocate a principles-based regulatory framework that is flexible and more easily harmonized across jurisdictions.

Risk variables in insurance

Insurance is important to protect individuals and families when an unexpected event—such as water damage in a home or an automobile accident—occurs. Insurance premiums paid by many are collectively used to pay for claims made by few. Those people who do not have to make a claim pay for those that do.

To make insurance as fair as possible, insurers set premiums based on how likely it is that a client will make a claim. Each client pays a premium commensurate to the risk they represent. Insurers use a variety of sophisticated and objective tools to help them evaluate this risk:

• Property insurance tools: To determine property insurance premiums, insurers look at factors such as location of the house, age of the roof and responsible personal credit management.
• Automobile insurance tools: To determine automobile insurance premiums, insurers consider factors such as prior accidents and convictions, age and gender of the driver and where the driver lives. Insurance companies are also exploring or using innovative telematics technology as a more accurate way of assessing risk and setting automobile insurance rates. Telematics uses a GPS tracking device in cars that record how people drive, including such things as speed, acceleration and braking. Clients can reduce their insurance rates by demonstrating good driving habits. 

Learn more Supporting Quantitative Analysis for the Use of Credit Information for Insurance Purposes, May 2011 Research commissioned by CADRI, which provides quantitative Canadian data to support the correlation between credit scores and insurance loss predictions.