TORONTO, Dec. 12, 2003 – Canada’s property and casualty insurers posted weaker financial results in the third quarter of 2003. The strongest downward influence came from the auto insurance sector, where rate freezes in several jurisdictions combined with an absence of government measures to control claims costs have not allowed insurers to lower premiums for policyholders.
“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,” says Jane Voll, acting Vice President, Policy Development and Chief Economist, Insurance Bureau of Canada. Where proper and fair controls are in place as in New Brunswick, insurers have been able to pass on savings to consumers while improving their own financial position. “New Brunswick’s reforms to deal with rising claims costs stand out as the only sign of improvement in auto insurance across the country,” adds Voll.
Claims costs in all lines of business rose during the third quarter as the industry paid for losses stemming from 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. While investment income rose for the period, overall profits were down by 20 percent over the previous quarter.
The industry expects the weak results of the current quarter will continue through to the year-end. “At this point, the fourth quarter of 2003 is expected to continue the trend of disappointing results for the industry,” says Voll. “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 at the end of the year for higher than expected claims costs,” adds Voll.
Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents more than 90% of the non-government home, car and business insurance in Canada.
To view the IBC Quarterly Financial Results, please visit: www.ibc.ca/pdffiles/publications/press_releases/Qtrly_report_Dec_2003_.pdf.