THE PENALTY BOX

Posted: March 15 2017

BY MICHAEL CAMPBELL

There’s a room inside Trisura Guarantee Insurance Company’s Toronto office called the Penalty Box. No, it’s not what you’re thinking. Trisura’s Penalty Box is one of several sports-themed meeting spaces named by staff as part of an inclusive Human Resources initiative, certainly not an obtrusive Human Resources prohibitive against mischievous employee behavior.

Inside the Penalty Box is a table, three chairs, a TV; standard meeting room fare – sans Gatorade, for now. The walls are adorned with framed artistic depictions of retired NHL goaltending greats: Johnny Bower, Glenn Hall, Gerry Cheevers, Gump Worsley. These net minders made their living attempting to block the routinely howitzered disks of vulcanized rubber from finding the gaps in their minimal equipment.

Fittingly, the Penalty Box was the meeting room where I booked a chat with Rob Litt, a member of Trisura’s Risk Solutions department, to talk about a product referred to as “GAP coverage”.

Gaps. Ok, let’s focus on that word, or rather two versions of that word. There’s the word “GAP” and then there’s the word “gap”. Don’t worry, I’m not taking your ability to read regular-sized letters for granted. A “gap” is an empty space or a void. “GAP” coverage is a Risk Solutions product (definitely not the popular retail fashion outlet) that stands for Guaranteed Asset Protection. It’s a product that protects consumers from negative equity when their vehicle is a total loss due to accident or theft.

Let’s rewind. Sometimes referred to as the “black box” of the insurance business, Risk Solutions is best defined as a way to respond to non-conventional exposures by providing coverage that caters to circumstances in which conventional insurance is difficult to source. The main function is to protect the consumer from gaps in insurance, or if you’ll entertain my goalie metaphor once more, well…you get the idea: Protection, coverage, etc. (This stuff writes itself).

Fast forward to my conversation with Rob Litt, who begins the discussion by quoting an old adage that’s familiar to those who own a car and to those who don’t.

“A new vehicle depreciates in value as soon as you drive it off the lot. An auto insurer will only pay depreciated value so they may not cover enough to repay your full loan balance. Trisura offers a product to fill the remaining balance,” he said.

No more ugly surprises, in other words.

“PERHAPS YOU OR SOMEONE YOU KNOW HAS HAD A VEHICLE WRITTEN OFF, AND THEIR INSURANCE SETTLEMENT WAS LESS THAN THEIR LOAN BALANCE. IT’S NO FUN OWING SEVERAL THOUSAND DOLLARS ON AN ASSET THAT HAS BEEN SCRAPPED.”

‘Gap-filling’ coverage has accounted for a healthy portion of Trisura’s Risk Solution revenue over the years. Litt states that innovation and diversification are mandatory for the continued evolution of the business. He cites the 2008 financial crises and the associated automotive industry collapse as a cautionary example.

If this were a classroom, now would be the time when I throw my chalk at all the sleeping students to force them to pay attention (probably a good thing I didn’t end up a teacher).

“CONSUMERS ARE MORE SAVVY, THEY HAVE UNLIMITED ACCESS TO INFORMATION AND ARE MORE EDUCATED. THEY DON’T WANT TO BE TAKEN ADVANTAGE OF,”

…said Litt, making his pitch for businesses to assess consumer’s needs based on a sense of practicality that’s necessarily personalized.

What separates one insurer from the rest is an expressed commitment to act upon transparent intentions that help brokers become and stay relevant. Litt’s comments support the notion that the broker network will always be required to help consumers find the right insurance that adequately fills gaps in coverage. Constantly shifting trends such as the big-bad-wolf of direct-to-consumer insurance create convenience for the consumer, but also deprive the consumer of professional, personalized advice. It’s true that data is more accessible than ever, but who will act as guide through the myriad of information? How can the consumer separate gold from sand? Brokers specialize in finding gold. Insurers need to embrace hard work in order to forge valuable products. Litt and the Risk Solutions team at Trisura understand.

“Trisura’s approach to business today is that there’s got to be fair value for the consumer. What’s the reputation of the administrator? Are they charging enough premium to cover future liabilities?”

Litt continued to wear passion on his sleeve, and I wasn’t about to stop him.

“People don’t like a bullshitter. It’s not that difficult to understand. They want to be treated fairly and with respect.”

How’s that for transparent intentions? You might be tempted to play the role of zebra, dishing out 2 minutes for a comment like this, but we were already in the Penalty Box, with our 2 minutes coming to an end.

“WE’RE STAUNCH ABOUT DRAWING A LINE IN THE SAND ABOUT WHAT WE’RE WILLING TO DO. WE DO A TON OF DUE DILIGENCE. WE ASK THE TOUGH QUESTIONS. WE DO THE WORK AT THE FRONT END.”

Finding ways to close the gaps in coverage is no easy task. It takes grit, and a sense of “staunchness”, to borrow Litt’s word. Harder still is the role of the broker to compete with the insurance robots of the future. GAP coverage is a product created by people with a passion for protection. The ultimate goal is benefiting the consumer; a goal that could mean the difference between a devastating loss and a cup-winning shutout. Plan the parade, I say.

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