How These Two Auto Insurers Rate Gender X Differently.

Pembridge Insurance Company plans to start rating motorists who identify themselves as ‘Gender X’ in Nova Scotia, charging Gender X motorists the same as women, the province’s regulator announced Tuesday.

Through its Pembridge unit, Allstate writes home and auto insurance in Canada through brokers.

As it stands, Pembridge’s rating algorithm in Nova Scotia only recognizes the male and female genders, wrote David Almon, a Nova Scotia Utility and Review Board member, in the board’s May 26 decision.

Tuesday’s decision comes six weeks after NSURB approved TD’s new rates and risk classification systems.

In Nova Scotia, TD Insurance Group — which includes Security National Insurance Company, Primmum Insurance Company, and TD Home and Auto Insurance Company — will start by taking the average of what Gender X drivers would have paid had they been male and what they would have paid had they been female.

“Rather than taking the approach of charging the lowest rate, the TD blending approach is replicating, to some degree, the premium that a rating algorithm without gender would produce. If gender were removed, the experience of both male and female operators would be aggregated, and the combined experience data would be used to develop required premiums,” NSURB member Peter Gurnham wrote in the decision approving TD’s rate filing, released April 16.

TD Group’s new rating methodology is already in effect.

In a separate release May 20, released test data generating by its own quoting software showing men pay more than women — with all other factors being equal 3 in Toronto, Calgary and Montreal. The disparities shrink in older age groups.

In Nova Scotia, residents had already been able to make one of four choices (male, female, gender x or no indicator) when applying for a driver’s licence or photo ID card.

With NSURB’s May 26 ruling, Pembridge is now approved to assign the same premiums to Gender X drivers as females with similar characteristics, the NSURB member Almon wrote. Those changes take effect Sept. 2 for new business and Nov. 1 for renewals.

In TD’s case, a Gender X driver in Nova Scotia would be referred to a special unit within the underwriting department. The driver’s gender would be recorded in the client file.  The case would then be flagged for review at renewal, to make sure the premium is properly calculated based on the proposed formula.

“The issue with rating “Gender X” operators is what is the correct premium to charge?  Will the experience reflect better the characteristics of one gender over the other and if so, which gender is appropriate?  Some companies have opted to charge the lower of the male and female premiums for a risk with similar vehicle and driver characteristics,” NSURB member Gurnham wrote in April of TD’s rating methodology.

Since 2018, Ontario has allowed motorists to identify as Gender X. This was done to both accommodate and ensure the respectful treatment of transgender drivers and those who identify neither as male nor female, online quote vendor LowestRates.Ca wrote in an earlier blog.

Ontario’s decision to include Gender X on driver’s licences is good news because it allows people to live in a society that welcomes everyone, but also poses a challenge to the traditional rating system for auto insurance, brokerage Mitchell and Whale wrote earlier.

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Why Insurers are Investing in Drone Technology.

Accelerated drone usage by the insurance industry is another of the ripple effects that will come as a result of change thanks to the COVID-19 pandemic. The last few months have changed the way people and businesses interact due to physical distancing requirements, thus making contactless drone inspections vital to the way insurers do business, says a report from GlobalData, a data and analytics company.

Its Quarterly Tech Trends survey found that 35% of firms in the insurance industry said they were investing in drone technology — even 68% of them said drones would have a disruptive influence in the property and casualty space, as well as agricultural.

The usage of drones isn’t new to the insurance industry. Adjusters have been using drones to get to areas that people can’t — or get to them soon enough, like a flooded area. Earlier this year, Jeff Sutton, senior vice president of business development and marketing with Claimspro in Toronto, told Canadian Underwriter that taking advantage of drone technology was something that has picked up in the last year to year-and-a-half. GlobalData’s report suggested that adoption will increase more rapidly.

“Drones are particularly useful for inspecting large-scale and difficult-to-reach infrastructure as well as vast areas of land,” said Beatriz Benito, senior insurance analyst at GlobalData. “The value proposition of drones had centred on the speed and safety they offer in loss adjustments, which ultimately resulted in operational efficiencies and cost savings.”

But in a novel coronavirus world, the benefits of using drones is being highlighted even further. Physical assessments are hampered by social distancing and isolation guidelines. “Keeping human contact to a minimum has not only become important, but sometimes strictly necessary because of lockdowns or parties — loss adjusters, claims handlers or policyholders — self-isolating,” GlobalData’s report said. “This means that walking through a damaged property with a policyholder may no longer be feasible.”

Throw in a natural disaster on top of a pandemic, expect drone technology to be of greater import. “Climate change has worsened extreme weather conditions such as hurricanes, floods and tsunamis as well as non-weather natural disasters like earthquakes, volcanoes, and wildfires,” the report said. “After a disaster during the lockdowns, home insurers can use drones to inspect properties while still social distancing.”

Using drones is also an avenue to save carriers money, Benito observed, which is a significant consideration due the last few months. Customers will see benefits as well in their claims journey.

“At a time when many insurers have been badly hit by the pandemic, technology that has the potential to bring operational savings is likely to lure the industry,” she said. “On the other hand, customers will benefit from quicker claims processing and faster payouts.”

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