Canadian insurers’ income to drop Cdn$1billion between 2006 and 2007

Pricing and claims trends in Canada’s property and casualty industry over the past year suggest Canadian insurers will see a Cdn$1 billion drop in net income between 2006 and 2007, according to KPMG senior manager Blair Manktelow.

Speaking at KPMG’s 16th annual insurance conference in Toronto, Manktelow predicted Canadian insurers would collectively bring in a 2007 net income of about Cdn$4 billion, compared with a 2006 net income of Cdn$5 billion.

Manktelow, who said he spoke for himself and not for KPMG, predicted the market might further deteriorate in 2008, with a projected total net profit of Cdn$3.5 billion.

He qualified that his 2008 estimate was much more uncertain than his 2007 projection, because as projections go out further in the future, it is more difficult to gauge the financial variables that may be in play.

But overall, the industry’s profits are starting to trend downwards, said Manktelow. He attributed the deteriorating profit margins in part to what is happening in Ontario’s auto lines sector — i.e. higher claims costs for bodily injuries, disability injuries and medical rehabilitation — and the level of competition currently existing in commercial lines.