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Based on the best pricing conditions, insurance brokers collect quotes from multiple insurers who share the risk of insuring layered properties that are often worth millions of dollars and expensive to repair. This is often referred to as a subscription policy.
Each insurer submits an offer, however at the best price terms instead of the premium cost based on an average of the offers, it is based on the highest offer, even if most of the quotes were lower.
“Our BCFSA team collected sample data from industry on the layers of insured insurance properties over a period of one month to get a better insight into this practice,” said Frank Chong, BCFSA’s vice president of regulation, in a press release. “We found that about 94% of the properties of the sample were negatively affected by this practice.”
The authority has received assurances that the practice will be phased out by January 1. This will give insurers time to adapt their IT systems so that they can adapt different prices for each insurer.
The BC Financial Services Authority is expected to publish its final report on the province’s layered insurance market by the end of this year.
AND THERE’S MORE …
– with files by Dan Fumano and Lori Culbert
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