March 8, 2018 by Greg Dalgetty, Editor
The insurer saw its combined operating ratio (COR) increase to 102.2% last year (compared to 93% in 2016) and its operating profit fall to $78 million (down from about $460 million in 2016), the company announced on Thursday.
In a call with Canadian Insurance Top Broker, Jason Storah, Aviva Canada’s executive vice-president of broker distribution, said the insurer is aiming to return to its target COR of 94–96% by 2019.
“We’re going to take the time to take the right actions, rather than trying to do everything at once,” Storah said. “This is a business that’s delivered market-leading results in the past and we’re really confident with the team we have that we’re going to do the same in the future.”
The insurer said its recent struggles reflect industry-wide pressures in the auto market—where the frequency of collisions and cost of repairs has increased—catastrophic weather events and large losses in commercial insurance.
Storah told Top Broker the insurer will be looking to increase auto and property rates as a result of this, in addition to zeroing in on underwriting discipline.
“We’re looking for rate increases across the board,” he said. “So far we’ve got about a 5% rate increase going through our book, and we’ll be looking for more rates going forward.”
On the auto front, Storah expressed optimism about Ontario’s Fair Auto Insurance Plan, which was released late last year.
Based on recommendations made in a report by David Marshall, the province’s advisor on auto insurance, the plan would standardize treatments for common auto collision injuries and establish a Serious Fraud Office to investigate and prosecute auto insurance fraud, among other measures.
“We’re very optimistic about the impact the recommendations from the Marshall report would have on the industry,” he said. “That report identified about 50% of [insurers’] costs were going to lawyers and other individuals in the insurance world that weren’t the actual insured individuals.”
Although there weren’t any major nat cat events in 2017, Aviva had slightly higher losses last year compared to 2016, attributable to combined losses from the B.C. wildfires and flooding in parts of Ontario and Quebec.
“In 2016, you had big, headline-grabbing losses with the horrible events in Fort Mac,” Storah said. “For us, interestingly, in 2017, we had $123 million in cat losses, versus $122 million in 2016… While they were much smaller events, rather than the big, headline-grabbing events, from a cost perspective, they were just as significant.”
On a positive note, Aviva did see its new written premiums increase by 15% in 2017, due to a 12-month contribution from RBC General Insurance, which the insurer acquired midway through 2016.
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This story was originally published by Canadian Insurance Top Broker.