Canadian Auto Results Show Improvement

Although it remains an unprofitable business, auto insurance results did improve in 2003, according to a soon-to-be-released report from A.M. Best. In its statistical review of auto insurance, the rating agency finds premiums rose and losses declined in 2003, particularly for the top 25 writers in Canada.

As a result of premium increases, auto insurers (excluding the Insurance Corp. of B.C. (ICBC)) saw direct written premiums climb 17.2% in 2003 to $15.6 billion. The top 25 writers accounted for $11.7 billion of this total, equal to 75% of total premiums. At the same time, auto insurers were able to drag down loss ratios to 81.3% in 2003, from 87.2% in 2002. This improvement is largely came about from premium growth, A.M. Best notes.

For the top 25 writers, 2003 saw a loss ratio of 82.3%, down from 87.9% in 2002. The report notes that when expenses are taken into account, auto insurance remains an unprofitable line. And, while many regions and individual insurers are working to implement claims cost controls, governments are also imposing rate freezes and/or rollbacks on this already unprofitable business. “A.M. Best anticipates continued improvement on automobile lines overall in 2004, but remains guarded about the long-term impact that regulatory changes will have upon this struggling sector of the Canadian property and casualty insurance industry.