B.C. brokers face loss of CNS coverage

June 20, 2022 — ANDREW Janzen figured he already had his plate full as he prepared for his term as president of the Insurance Brokers Association of B.C.

There was the government-ordered switch to no-fault auto insurance and its consequent reduction in brokers’ fees, nagging worries about the Insurance Corp. of B.C.’s move to online renewals and the perpetual need to attract and keep staff at brokerages — challenges that are more than enough to keep anyone occupied.

Then Intact Insurance, the largest insurer in the country, announced recently that it will be running off policies previously held by RSA through Canadian Northern Shield Insurance.

And suddenly the world of B.C. brokers became a whole lot more complicated.

“With Intact dropping the CNS book, I think the market in B.C. is going to go into chaos over the next 12 months and I’m actually really worried about it,” Mr. Janzen told Thompson’s ahead of IBABC’s recent annual conference.

“As of Oct. 1, Intact has advised that they are going to run off the book. The $200m CNS book will no longer exist and Intact will not offer any capacity.”

CNS was originally the shortlived general insurance agency of the provincial government, then sold to CUMIS, the credit union-linked insurance company and then to RSA Canada — which was acquired by Intact’s parent last year.

CNS is concentrated in B.C., where Intact is the largest home insurer — and the largest issuer of earthquake insurance.

As such, it is worried about being overexposed to earthquake risk and not renewing CNS policies will reduce that exposure.

It will also reduce the availability of earthquake coverage in general throughout B.C. and especially on Vancouver Island.

“Think about the 100,000 clients of CNS — that’s an approximate number — that are going to have a stinker of a time with their brokers,” Mr. Janzen said.

“It’s going to be a challenge.” he said. “I’m concerned.”

Intact confirmed to Thompson’s that it is running off CNS policies in B.C. — and that the reason is concern about overexposure to earthquake risk.

“The potential impact of a catastrophic earthquake in B.C. means that we continuously review our risk exposure and we assess our coverage policies in the province,” said Emilie Dutil- Bruneau, VP of communications for Intact Financial Corp.

In addition to ending all CNS coverage, Intact is also increasing earthquake deductibles across its remaining lines of insurance.

The amount by which deductibles will increase was not made public.

“The decision to wind-down CNS and increase earthquake deductibles across all remaining lines of business was not made lightly,” Ms. Dutil-Bruneau said.

“This decision follows a period of significant due diligence, including efforts to sell the CNS business which proved unsuccessful due to the disproportionate earthquake exposure.

“While it is clear that it would be difficult for any one company to take the entire CNS portfolio given the level of earthquake exposure, we believe the market is large enough overall to absorb it when spread across many companies.”

She said Intact remains “firmly committed” to B.C.

“We are committed to a slow and orderly wind-down of CNS that provides a smooth transition for customers. We are actively engaged with brokers to manage this process as they work to place CNS policies with other carriers.”

Ms. Dutil-Bruneau echoed the industry’s frequent call for some degree of federal government participation in earthquake preparedness.

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