The P&C Industry in Canada: Continuing the Dialogue – by Julie Dickson OSFI

October, 2009 – When I last spoke to you a year ago, the global financial sector was in a precarious state. We had just witnessed the collapse of Lehman Brothers, the bailout of AIG, emergency bank holding company legislation for Goldman Sachs and Morgan Stanley, and the failure of Washington Mutual. Soon after the NICC gathering, the Troubled Asset Relief Program (TARP) was signed into law in the U.S., and the U.S. government began buying stock in the largest US banks.

Clearly, many things can go wrong when risk is not managed properly, or when capital levels are too low, or when asset values get out of whack, or when markets suddenly become highly risk-averse.

Canada was fortunate to have performed relatively well during this period of turmoil, and there has been a lot of discussion around the reasons for Canada�s performance. Reasons include, among others: better regulation, better government policies, and better risk management by many Canadian companies.

While there are positive things to say, today I am going to outline where I might have some concerns about the P&C industry in Canada.

So, what are my concerns? Well, aside from the fact that I am paid to worry, we have seen the industry go from the heights of profitability a little over two years ago, to a state of weakened profit fundamentals in almost every area or line of business that one might choose to look at. While the industry is still earning a profit in 2009, it is not nearly as large as only a few years ago.

Areas of Concern

There are many distinct elements that have contributed to this combined result. Some elements have shown improvement while others continue to aggravate our level of concern. Let’s look at some of the specifics.

  • Automobile Insurance (specifics on Ontario)
  • Property Insurance
  • Capital

A number of lessons have been learned and they impact what will follow.


In conclusion, the scope of events resulting from the global financial turmoil has been tremendous. Although Canada was fortunate to escape the worst of this crisis, we cannot be too complacent. As I mentioned at the beginning of this presentation, I am paid to worry about the future. So I have tried to isolate and highlight a few areas where I think we can do better.

For the full text of the remarks, go here

About OSFI

OSFI is an independent agency of the Government of Canada. It reports to the Minister of Finance. For more information visit