A quarterly analysis of economic trends in Canada�s P&C insurance industry.
This issue of Perspective looks at four areas:
The Hazard of the Average – by Jane Voll: Industry-wide financial results for the P&C insurance industry mask tremendous variety, over time, across lines of business and across insurers. Last year, the industry posted an aggregate average return on equity for all lines of business of 11.6 percent. The top company result was an outstanding 43.8 percent, while the worst result was an equally outstanding -90.2 percent.
Factors in the Insurance Cycle: Over long periods, the price of insurance reflects the cost of settling claims. Over the last twenty two years premiums and claims have both been rising at roughly 7.6% per year.
Death and Taxes! Home, auto and business insurance are some of the most heavily taxed products in Canada – at roughly three times that of other financial services. In 2003, the P&C insurance industry paid roughly $5.1 billion in taxes and levies in Canada.
The root of the problem� Commercial premiums stabilizing for property but not for liability. Concerns of Canadian businesses over the cost of insurance have grown in recent years. Yet, while challenging for some individual businesses, the aggregate increase in insurance premiums over the past two years does not appear to present a productivity or competitiveness challenge for the Canadian economy as a whole.
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.