Insurance Trends
Ontario’s first all-digital insurance provider disrupts traditional models and makes safety a prime motivator
Onlia continues to break new ground in the Ontario insurance landscape with a unique approach that elevates safety and incorporates a prevention-first philosophy into its policies.
For its auto insurance, Onlia’s core premise is to provide a range of rewards for safe-driving behaviour, with the goal of preventing accidents and making communities safer. The company has also recently entered the home insurance market in Ontario. One reward for Onlia customers who bundle auto and home insurance is a free, virtual home checkup that helps them improve safety in their homes.
In addition, this fully digital insurance provider is making its voice heard at the government and regulatory levels in the province. Onlia recently played a role in developing an initiative unveiled by the Ontario government in its most recent provincial budget: an action plan aimed at making the Ontario insurance sector more competitive and innovative.
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We want to help Ontario residents and their communities become safer, and we do that by turning the traditional insurance model on its head. ”
A different model for insurance
Onlia began operating in Ontario around three years ago, and the company says it immediately set itself apart in three main ways.
First of all, Onlia is fully digital and the only insurance company in Ontario where you can finalize your insurance agreement online, with no subsequent offline steps required.
Another approach that makes Onlia different is its offer of flexibility at no additional cost, says Pieter Louter, president and CEO of Onlia.
“Onlia policy-holders can stop or pause their auto coverage at any time without paying cancellation fees; typically, insurers establish minimum coverage periods and charge fees for early cancellation, and we do not,” says Mr. Louter.
Onlia’s most prominent distinction is its rewards system, which allows customers to benefit from driving safely.
“We are grounded in the principle of rewards rather than penalties,” says Mr. Louter. “We want to help Ontario residents and their communities become safer, and we do that by turning the traditional insurance model on its head.”
Onlia’s alternative model incorporates principles from “behavioural economics” – the study of how everything from psychological and emotional factors to cognitive biases affect attitudes and decision-making related to finances.
“Consider how provincial governments regulate road safety. They impose penalties such as fines and demerit points when drivers violate safe-driving rules. The insurance system uses the same principles,” says Mr. Louter.
“If you are fined or you make a claim because you were in a collision, you are penalized with higher insurance premiums down the road.”
Research in behavioural economics tells us that rewards are a much stronger motivator for behavioural change than punishment, he says. “And research also demonstrates that changing behaviour is very difficult unless you are conscious of what you are doing and unless you see the positive feedback quite quickly.”
Timely positive reinforcement is embedded in Onlia Sense – the company’s safe-driving app that coaches and rewards users for making safer driving decisions. Anyone can download Onlia Sense onto their mobile, and by tracking their driving behaviour over time, can see how they are getting better. Rewards such as dining gift cards for Recipe restaurants are available to drivers who demonstrate safety improvements – based on the app’s five metrics.
The rewards are more extensive for Onlia Sense users who purchase the company’s auto insurance, explains Fernand Vartanian, general counsel and head of business development for Onlia.
“In addition to the other discounts we give for auto insurance for claims-free and driving well, our safe-driving app gives drivers the opportunity to earn cash rewards,” he says. “You can receive from $5 to $40 a month cash deposited into your bank account, and if you extrapolate that over a year, you can receive up to 21 per cent of the value of your premium.”
Beginning on December 1, Onlia is adding a new feature to further motivate drivers to be as safe as possible. Onlia Sense users will be able to set up a leaderboard that gives up to five drivers, for example, a group of friends and family members, the chance to compete to achieve the highest safe-driving scores and be rewarded with gift cards along the way.
“Behavioural economics research also tells us that we can further incentivize behaviour change by coupling rewards with competition,” says Mr. Vartanian.
Onlia’s recently introduced home insurance policies also offer a safety reward, he adds. “We have partnered with a company called Setter, which will provide a free virtual home checkup to bundle customers. The checkup tells customers about areas where safety can be improved, giving them advice on how to de-risk their homes – which benefits both homeowners and the insurer.”
The Onlia executives stress that the data from Onlia Sense and the information gathered in the virtual home checkup are kept totally separate from customer policy information; nothing in the safety data realm ever influences the customers’ insurance premiums.
Working for a more competitive and innovative auto insurance sector
In its budget released November 5, 2020, the Ontario government announced an action plan to modernize what it called “outdated, burdensome [regulatory] requirements” in the auto insurance sector to encourage more competition and allow more innovation.
Onlia contributed to development of the plan and is very encouraged by the initiative. After explaining to the Financial Services Regulatory Authority of Ontario (FSRA) and the Ministry of Finance some of the barriers faced by Onlia as a fully digital insurance provider, the province agreed to look at ways to reduce some of the roadblocks.
“We are completely online, but yet when we have to cancel a policy, we have to send a registered letter to formalize it,” says Mr. Louter. “The province has agreed to move towards permitting insurers to electronically terminate policy contracts, with consumer consent.
“The budget also enables the FRSA to pilot innovative products and services to bring new consumer benefits to market more quickly,” says Mr. Louter.
“We are excited about the possibilities as outlined by the province,” adds Mr. Vartanian. “We believe that increasing competition and innovation will allow customers to benefit from new tools that are more responsive to their needs, as well as lower prices, in a province that has among the highest auto insurance premiums in the world.”
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