May 1, 2003
Sean van Zyl, Editor
With auto insurance accounting for nearly half of all premiums written in Canada, this once “darling” of the industry has now become the “wayward child” disowned by insurers as underwriting losses stemming primarily from soft-tissue bodily injury claims and tort costs continue to spiral out of control countrywide. Notably, insurers were forced to adjust their reserves by nearly two-thirds of a billion dollars last year as a result of an adverse development on auto business. Although several of the provinces are currently addressing legislative product reform initiatives in a bid to curtail auto losses and the barrage of premium hikes implemented by the insurance industry last year, insurers remain cautious in their market dealings, with many companies having “capped” writing of new business. The result has been a dearth of underwriting capacity, with Ontario and the Atlantic Canada region being particularly hard hit. As insurers continue to “shun auto” in wait of political reform, many in the industry wonder whether the product will ever regain attraction.