Ontario approved auto rate drops for insurers filing in Q4 2014

The Financial Services Commission of Ontario reports the decrease in private passenger auto premiums was 0.54%, for insurers with rate changes approved or ordered by the regulator during the last three months of 2014.

FSCO recently released its overview of Q4 2014 rate changes for 16 insurers, representing 46.81% of total premium volume. Those insurers had rates approved in the fourth quarter and the largest decrease was 6.44%.

FSCO reported the average percentage change for each company, based on all the drivers they insure.

Insurers covering private passenger auto are required to submit proposed rate changes – along with supporting actuarial data – to FSCO for approval. The Automobile Insurance Rate Stabilization Act, which took effect in August 2013, established an “industry-wide target reduction,” by 15%, of the “average of the authorized rates that may be charged by insurers” for private passenger auto, with a two-year target.

For the fourth quarter of 2014, the largest percentage change was for The Wawanesa Mutual Insurance Company, with an approved rate decrease of 6.44% for the quarter. Wawanesa had 4% of the market in 2013.

The effective new business date and the effective renewal business date varied by insurer, ranging from Oct. 20, 2014 for Pilot Insurance Company’s new rate program to April 15 renewals for Aviva and its subsidiaries.

Intact Insurance Company had an approved rate decrease of 2.83%. FCSO reported separately Intact Insurance’s annual rate cap filing impact, which was 0%. That was based on FSCO’s review of the company’s anniversary capping report. The purpose of the separate report on Intact was to show “the estimated residual impact of a previously approved rate filing that introduced rate capping procedures.”

FSCO also reported on three other insurers owned by Intact Financial Corp.: Trafalgar Insurance Company of Canada (with market share of 1.17% in 2013), which had an approved rate increase of 0.27%; Novex Insurance Company (with market share of 1% in 2013), with an approved decrease of 2.89%; and Jevco Insurance Company (with market share of 0.9% in 2013), with an approved rate decrease of 0.07%.

FSCO reported that Aviva Insurance Company of Canada (with 5.74% market share in 2013) had “rate changes with no overall impact.” FSCO reported two filings for Aviva subsidiary Pilot Insurance Company of Canada. One had rate changes with no overall impact, while the other, marked n/a, was for the introduction of Pilot’s new rate program. Aviva subsidiary Scottish & York Insurance Co. Ltd. had rate changes with no overall impact, while another Aviva subsidiary –  Traders General Insurance Company – had an approved rate decrease of 0.27%.

Three insurers – Certas Home and Auto Insurance Company (with 9.84% market share in 2013), Allstate Insurance Company of Canada (with 4.52% market share in 2013) and Royal & SunAlliance Insurance Company of Canada (with 1.18% market share in 2013) – had rate changes with no overall impact. Certas, owned by Desjardins Group, is writing State Farm-branded policies in Canada starting Jan. 1. FSCO’s report for Q4 2014 was for the transfer of State Farm’s business to Desjardins, which closed its acquisition this month of State Farm Mutual Automobile Insurance Company’s Canadian operations.

RSA subsidiary Western Assurance (with 1.24% market share in 2013) also had rate changes with 0% overall impact.

The Co-operators General Insurance Company (with 1.18% market share in 2013) had an approved rate decrease of 0.1%.

FSCO also published a pie graph showing a breakdown – by coverage – of private passenger auto claims costs in 2013.

More than a third (34.2%) was for third-party liability bodily injury; 29.6% was for accident benefits; 14.4% was for direct compensation property damage; 10.5% was for collision; 4.3% was for comprehensive; 3.9% was for all perils; 2.2% was for uninsured auto; and 0.9% was for the optional family protection endorsement, known as OPCF 44R, which is essentially intended to cover a vehicle accident victim who sues a defendant whose liability limit is not enough to cover the losses.