According to a bulletin from the Insurance Bureau of Canada, the country’s P/C insurers posted generally weaker financial results in the third quarter of 2003, due largely to a downward trend in the auto insurance sector.
The report cited “rate freezes in several jurisdictions combined with an absence of government measures to control claims costs,” which have “not allowed insurers to lower premiums for policyholders.” Jane Voll, IBC acting Vice President, Policy Development and Chief Economist, stated: “Auto insurance reforms remain the key concern everywhere with the exception of New Brunswick where meaningful reforms are working and drivers are seeing lower premiums and rebates.”
The report stressed that in New Brunswick, where it said, “proper and fair controls are in place,” insurers have been able to pass on savings to consumers while improving their own financial position. The Province’s “reforms to deal with rising claims costs stand out as the only sign of improvement in auto insurance across the country,” Voll added.
The IBC also noted that claims costs during the third quarter had been generally higher in other lines as well, with companies paying claims from damages caused by Hurricane Juan in the east and the wildfires that struck throughout British Columbia. “In general, premium growth slowed to the lowest rate seen in the last two years,” the report noted. “While investment income rose for the period, overall profits were down by 20 percent over the previous quarter.” Unfortunately the IBC doesn’t see a change coming.
“At this point, the fourth quarter of 2003 is expected to continue the trend of disappointing results for the industry,” Voll stated. “Further auto losses will be absorbed by every company when Facility Association, the auto insurer of last resort, posts an expected loss of up to $600 million [U.S. $454 million] at the end of the year for higher than expected claims costs.”