Canadian Underwriter
News

Canadian auto personal accident benefits loss ratio highest since 2010: A.M. Best


September 24, 2015   by Canadian Underwriter


Print this page Share

The loss ratio, in personal accident benefits for Canadian private auto insurers, rose sharply in 2014, but changes made in Ontario are starting to work their way through the system, an analyst from A.M. Best Company Inc. told insurance professionals Thursday in Toronto.

Joel Silverthorn, senior financial analyst for Oldwick, N.J.-based A.M. Best, alluded to several measures taken by the Ontario government which were intended to help reduce auto insurers’ expenses. [click image below to enlarge]

The loss ratio in personal accident benefits rose in 2014 for Canadian auto insurance carriers

One was Bill 15, an omnibus bill passed into law in November, 2014. Another was the 2015-16 budget document – released last April – in which the ruling Liberals promised to reduce the mandatory accident benefits coverage limits to $65,000 (including attendant care), to reduce the catastrophic impairment coverage and to change the criteria for catastrophic impairment.

Those measures “had some anti-fraud as well as some other initiatives to help the expense side, because as rates were brought down, the promise from the government was, ‘We will help you on the expense side,'” Silverthorn said Thursday. “That’s working its way through and that’s going to be something everyone is holding their breath with.”

Silverthorn made his remarks during A.M. Best’s 2015 Insurance Market Briefing – Canada, held at the Sheraton Centre.

He referred to Ontario’s Automobile Insurance Rate Stabilization Act (AIRSA), which took effect in August, 2013. That law established an industry-wide target reduction, by 15% within two years, of the “average of the authorized rates that may be charged by insurers” for private passenger auto, with a two-year target.

In a report on the Canadian market, A.M. Best noted that the industry-wide loss ratios, among private insurers, in auto personal accident, were 143.3% in 2010, 74.3% in 2011, 50.4% in 2012, 67% in 2013 and 82.3% in 2014.

Loss ratios in auto liability were 69% in 2010, 82.5% in 2011, 88.6% in 2012, 77.4% in 2013 and 73.5% in 2014.

In Ontario, several changes will take effect for accidents occurring on or after June 1, 2016. Currently, mandatory coverage, for catastrophic injuries, includes $1 million in medical and rehabilitation benefits and another $1 million in attendant care coverage. This will change to one $1-million limit for attendant care and medical/rehab.

For non-catastrophic injuries, the coverage limits will be reduced to $65,000 limit for medical/rehab and attendant care. The current coverage entails one limit of $50,000 for medical/rehab benefits and a separate limit of $36,000 for attendant care.

Bill 15 – which was passed last November – changes the Consumer Protection Act to require tow and storage providers to publish their rates, accept credit card payments and provide itemized invoices before receiving payment. It also reduces, from 60, the number of days that a vehicle can be stored after an accident, without giving notice to the owner and still allowing the storage firm to claim a lien.

It also reduces the prejudgment interest rate for non-pecuniary loss for auto accident victims and moves the claim dispute resolution system from the Financial Services Commission of Ontario to the Ministry of the Attorney General’s licence appeal tribunal. Parties will no longer be able to bring disputes over accident benefits into court, other than appeals from licence appeal tribunal decisions or applications for judicial review.


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*