Canadian Market (November 01, 2008)

ONTARIO AUTO INSURANCE RATES ON THE RISE

A significant portion of the Ontario private auto insurance market went to the regulator to ask for rate increases in 2008 Q3.

“In the third quarter of 2008, for the 77.97% of the market that had rate changes approved, the average rate change was +1.12%, when weighted by market share,” the Financial Services Commission of Ontario (FSCO) said in a statement.

The province’s auto insurance rates have been on the rise since 2004.

“The rate changes approved in 2004, 2005, 2006 and 2007 were -10.60%, -2.43%, -1.27% and +0.55%, respectively, for the entire market,” FSCO notes.

DUTCH GOVERNMENT BOLSTERS ING’S CAPITAL POSITION

The Dutch government bolstered ING’s capital position in October 2008, when it approved a EUR10-billion (Cdn$15.9-billion) injection into the parent company.

ING will issue non-voting, core Tier-1 securities to the Dutch state for a total consideration of EUR10 billion, according to ING. The state will rank exactly the same as common shareholders.

ING Bank’s core Tier-1 capital ratio will be brought to around 8% due to the transaction. Bank holding companies are generally expected to have a Tier 1 capital ratio of at least 6%.

The move is also expected to strengthen the insurance balance sheet and reduce the group’s debt/equity ratio to around 10%.

DIRECT WRITERS SCORE WELL IN CANADIAN CUSTOMER SATISFACTION SURVEY

State Farm scored highest in customer satisfaction among private full-coverage automotive service providers that were ranked in an inaugural customer satisfaction survey conducted by J. D. Power and Associates.

Runners-up for customer service in private auto insurance included belairdirect and Johnson Insurance.

J. D. Power and Associates’ 2008 Canadian Home and Auto Insurance Customer Satisfaction Study measured auto and home insurance policyholder experiences with their primary insurers based on five different categories: customer service; price/premium; policy offerings; billing/payment; and claims.

In auto insurance, State Farm scored a 757 on a 1,000-point scale, scoring particularly well in the categories of customer service and billing/payment.

Among home insurance providers, BCAA (812) ranked highest in the customer satisfaction survey, based on its scores in the customer service, price/premium, policy offerings and billing/payment categories.

SSQ General (787) and belairdirect (777) followed BCAA in the home insurance rankings.

The study is based on responses from 8,965 auto insurance policyholders and 5,687 home insurance policyholders. It was fielded through a nationally representative online survey conducted in August 2008.

ONTARIO INTRODUCES BILL TO BAN CELL PHONE USE WHILE DRIVING

A private member’s bill proposing a ban on the use of cellular devices and other handheld equipment while driving on a highway received second reading in Ontario’s Legislative Assembly on Oct. 28.

Bill 40 would amend the Highway Traffic Act to prohibit the use of a cellular phone, car phone, pager, personal data assistant, portable computer, fax machine or other equipment prescribed under the Act while a person is driving a motor vehicle.

The proposed bill includes exceptions for cases like emergencies, as well as situations in which an experienced driver uses the equipment entirely through a hands-free feature.

The Insurance Bureau of Canada (IBC) applauded the introduction of the bill, noting that distraction is a factor in as many as eight out of every 10 collisions.