Canadian premium growth outpaces world average

Total non-life insurance premium in Canada grew by 6.3% in 2010, according to data compiled for Canadian Insurance Top Broker’s 2011 Annual Statistical Issue. This rate outpaced the world average in non-life premium growth of 2.1%, based on figures from Swiss Re. Premium in the non-life sector in Canada increased to $45.7 billion in 2010, from $43.1 billion in 2009. This figure includes premiums for the Crown corporations (Manitoba, Saskatchewan and BC).

In the life and accident sector, total premium for life insurers increased to $41.2 billion in 2010, from $39.3 billion in 2009. (For more information on the 2011 Annual Statistical Issue, click here.)

Barb Sulzenko-Laurie, vice president, policy, at the Insurance Bureau of Canada (IBC) said factors contributing to growth for the non-life sector are the economy (GDP grew 3.3%), as well as demographic changes leading people to buy and upgrade homes and open and expand businesses.

“Cost pressures in certain lines of insurance also played a role in the industry’s premium revenue growth in 2010, notably in Ontario auto prior to the September 2010 reforms, as well the property lines where costs were being driven significantly by weather events in many regions of the country,” Sulzenko-Laurie told Canadian Insurance Top Broker.

She added the Ontario auto reforms appear to have brought measurable improvement in cost pressures on a traditionally troubled area. This is significant for the industry overall because Ontario auto represents about one-quarter of total premium revenue for the private P&C industry.

“On the property side, the effects of climate change continue to be felt in greater numbers of precipitation-related claims in some parts of the country and in fire claims in areas where climate change is manifesting itself in hotter, dryer environmental conditions,” she said.

Sulzenko-Laurie predicts the non-life sector will remain well capitalized and in a good position to take on what challenges may come this year.

Early signs indicate the Ontario reforms are positive, and with the provincial government’s new commitment to fighting benefits fraud the reforms should continue to improve, she said.

“In addition, more frequent catastrophic weather events appear to have become a fact of life that insurers will need to address,” she added. “Moreover, the higher incidence of worldwide catastrophic events that we saw in 2010 and the early part of 2011, if it persists through the year, could result in upward pressure on reinsurance costs.”

For the life sector, a 3.4% growth in products was the biggest contributor to increases in premium, according to Wendy Hope, vice president of external relations at Canadian Life and Health Insurance Association (CLHIA). This reflects a continued focus on health care across the country, she said.

“We expect the life and health insurance industry in Canada to continue to grow and thrive,” Hope told Canadian Insurance Top Broker. “We are one of the most successful industries in Canada and also one of the largest, employing more than 135,000 Canadians. The industry holds assets worth more than a trillion dollars, providing financial security to more than 26 million Canadians.”

Swiss Re reports worldwide growth

Growth in the Canadian insurance market is in line with global growth. According to Swiss Re’s most recent report, worldwide insurance premium volume increased 2.7% in 2010. Specifically, non-life premium rose by 2.1% and life premium rose by 3.2%. This was driven by economic growth, a rebound in capital and solvency.

Despite lingering uncertainty, the economic recovery should continue and bolster premium growth in the life and non-life sectors globally in 2011, stated a media release. However, investment income in both life and non-life sectors will remain low given that interest rates will only rise slowly, at best.

In the non-life sector, the trend is towards higher premium growth in 2011, said Daniel Staib, an author of the study. This trend will strengthen as premium rates begin to get adjusted upwards.

The report also found that the global market share of emerging countries is expected to continue to increase strongly from today’s 14% over the next ten years, and that China is likely to become the second largest insurance market within a decade.

To access the full report, click here.

This story was originally published by Canadian Insurance Top Broker.