Newfoundland Government releases study on homeowner, commercial and marine insurance

August 23, 2004 – Government Services Minister Dianne Whalen today released the Study of Homeowner, Commercial Property, Liability and Marine Insurance completed for government by an independent actuary.

Government commissioned Mercer Oliver Wyman Actuarial Consulting Ltd. to review the profitability of these types of insurance products and recommend options to ensure the products are available at reasonable rates. The study will be part of the public hearing into insurance being held in the fall by the Public Utilities Board.

“People who own homes, boats and businesses have been complaining about the difficulty in obtaining insurance and its cost. We wanted to determine whether these insurance products are profitable and what can be done to make them available at more reasonable rates,” Minister Whalen said. “We have reduced rates for auto insurance coverage by an average of 15 per cent with Bill 30, but that is only this government’s first step.”

The Study on Homeowner, Commercial Property, Liability and Marine Insurance found that homeowner insurance is very profitable in this province. Companies are averaging a profit of 19 per cent of the premiums. Averages in the report are based on a 10-year period. A five per cent profit is considered reasonable by the independent actuary.

Commercial property and liability insurance is significantly less profitable, and insurance companies are suffering losses on marine insurance. Companies are averaging a profit of two per cent on commercial property and liability, while the few companies that offer marine insurance are averaging losses of 46 per cent of premiums.

Government is concerned about an affordability and availability problem for certain types of risk, including homeowners with oil tanks, residents of downtown St. John’s and certain types of businesses.

The actuary recommends that government obtain additional information to confirm the profitability levels and rate increases in the report before taking action. The hearing will provide government with more information, as well as options for reducing the costs associated with providing these lines of insurance.

The study is one of two government commissioned into the provision of insurance in the province. The first study focused on auto insurance and formed the basis of Bill 30. That study was released March 17, 2004 and is available on-line at

Government is encouraging all interested parties to bring their views on the studies forward at the hearing. When the hearing is complete, government will decide what further action, if any, is necessary. The Study on Homeowner, Commercial Property, Liability and Marine Insurance is available on-line at