Remarks by Superintendent Julie Dickson, Office of the Superintendent of Financial Institutions Canada (OSFI), at the 2013 National Insurance Conference of Canada (Gatineau, Quebec; Sept. 23, 2013.)
Gatineau, QC (Sept. 23, 2013) – When I was here last year, I commented on how well the Property and Casualty insurance industry was doing. At the time, the P&C sector was enjoying relative stability compared to other sectors. Although companies were being affected on the investment side by low interest rates and market performance, overall measures like Return on Equity looked good and underwriting performance was the strongest since 2006 (although it should be noted that I am talking here about averages and that there was variation by company). Weather had been good for the first part of the year, and Ontario auto insurance reforms looked to be having a favorable impact. While antennae were up regarding earthquake risk, given the quakes in Chile, Haiti, Japan, and New Zealand – reminding us that Canada is not immune to earthquake risk – no major events were recorded.
Impacts on the P&C Insurance Sector
In terms of more P&C-focused risks, what a difference a year makes. Indeed, for many in the P&C industry, the year has been, as the Queen said in 1992, an Annus Horribilis (and the P&C year is not over yet). Perhaps CEOs of companies are thinking like Her Majesty, and saying that 2013 will not be a year on which they shall look back with “undiluted pleasure.”
Top-Notch Risk Management and Governance Pay Off
Sometimes concerns are raised about the industry’s ability to cope simultaneously with ORSA, capital, increased governance requirements, etc. Sometimes companies say that this could cause them to be distracted from the effective running of their companies. In OSFI’s view, those companies that have top-notch risk management and governance regimes in place will be ahead of the curve and better able than their peers to deal with challenges as they arise. In other words, even a bad year can turn into an Annus Mirabilis (wonderful year), knowing that effective risk management kicked in, losses were lower than what they might have been, and lessons were learned.
→ Read the full transcript (PDF).