June 6, 2003, Toronto – While some sectors of the property and casualty insurance industry have experienced marginal improvement in the first quarter of 2003, Ontario automobile results have deteriorated, according to the industry financial report released today.
“We have seen some improvement in the commercial property and homeowners’ insurance markets across the country,” said Paul Kovacs, Chief Economist, Insurance Bureau of Canada. “But the cost of providing auto insurance in Ontario, Atlantic Canada and Alberta continues to increase at an alarming and unsustainable pace.”
Overall, first quarter results show a financial improvement over the same period last year. At 102.8 per cent, the industry combined ratio has improved by almost six percentage points. “But one quarter does not make a trend,” warned Mr. Kovacs. “The problem of rising claims costs still exists. Although results have improved somewhat, action is still needed to address rising claims costs.”
Mr. Kovacs notes that consumers and insurers are experiencing insurance conditions not seen since the 1960s. Mortgage rates are at a 46-year low, bond yields and the rate of inflation are also at levels not seen since the 1960s. “Insurance markets are reverting back to approaches evident at that time,” said Mr. Kovacs. “They have a renewed focus on underwriting terms and rate adequacy.”
“Before we can see any long-term relief for automobile insurance consumers, we need government to take action and implement product changes in almost every province,” said Mr. Kovacs. “Until governments take action to contain costs related to settling claims, these markets will remain unstable for insurers and consumers alike.”
(View June 2003’s IBC Perspectives, pdf, 232k)
Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents the companies that provide more than 90 per cent of the non-government home, car and business insurance in Canada. To view news releases and information, visit the media section of our web site at www.ibc.ca.