MarketPlace

Claims

Weakened Irene wreaks havoc in Quebec, Maritimes

The verdict is still out on insured losses caused by Hurricane Irene in Canada, but loss estimates for the United States range between $3 billion and $6 billion (AIR Worldwide) and for the Caribbean range as high as $1.1 billion (EQECAT).
Hurricane Irene weakened to a post-tropical storm by the time it lashed parts of Quebec and the Maritime provinces on Aug. 29. The storm left hundreds of thousands of Canadians without power, downed trees and dropped up to 80 mm of rain.

The storm moved over Quebec City on Aug. 29, moving north-northwest, with maximum sustained winds of 80 km-h and gale force winds extending 587 km from its centre, according to a RMS release. The storm then tracked northeast over Canada, passing over parts of New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland before moving into the Labrador Sea on Aug. 30.

In the United States, the large number of people left without power and forced to evacuate could have a significant impact on insurance losses from additional living expenses, particularly in the Northeast [US] where the cost of hotels and living expenses are higher, an AIR
release said. “Business interruption losses could also be significant.”

F3 Tornado devastates Goderich, Ontario

An F3 tornado devastated Goderich, Ontario on Aug. 21, causing extensive damage, killing one person and injuring 37.
The tornado touched down at approximately 4 p.m., packing 280 km-h winds. It carved a path roughly 20 kilometres in length through the downtown core of Goderich, tearing the roof and first floors off of several businesses, downing trees and destroying cars, cbc.ca reported.

“Access to the downtown area is blocked off, and police have closed all entrances to the town for safety reasons and likely to discourage looting,” cbc.ca reported.

“The property damage to homes and personal property, businesses and public buildings is extensive,” the Insurance Bureau of Canada (IBC) said in a press release “Ontario’s home, car and business insurers will be there to help residents and businesses recover from this disaster.”

Saskatchewan insurers see loss ratios increase in 2010

Saskatchewan property and casualty insurers saw a 20-point increase in their loss ratios between 2009 and 2010 (from 58.4% to 70.1%), reported the province’s Superintendent of Insurance in its 2010 Statistical Report.

Overall, Saskatchewan property and casualty insurers saw an 8% increase in premiums written between 2009 and 2010 – from $2.07 billion to $2.23
billion.

The collective loss ratio in property lines spiked from 45.7% to 81.4% from 2009 to 2010. Insurers with the highest loss ratios in this line include St. Paul Fire and Marine (455%); Unifund Assurance Company (202.5%); and Asset Protection Insurance Exchange (170.8%).

Canadian Market

Federally licensed P&C insurers in Canada see profits cut by $600 million in 2011 Q2

Federally regulated foreign insurers saw their consolidated net income tumble in 2011 Q2 to $1.5 billion from 2010 Q2’s $2.1 billion, according to the Office of the Superintendent of Financial Institutions.

Foreign property and casualty insurers saw their collective net income dip from $117 million in 2010 Q2 to $47 million in the same period of 2011.

Canadian federally regulated property and casualty insurers also saw their net income drop from $1.96 billion in 2010 Q2 to $1.47 billion in 2011 Q2.

Underwriting income for foreign and Canadian federally regulated insurers dropped from $235 million in 2010 Q2 to an underwriting loss of $15 million.

Net investment income for Canadian and foreign insurers on a consolidated basis declined from $1.8 billion
in 2010 Q2 to $1.6 billion in 2011 Q2.

Key financial indicators deteriorate for Canadian P&C insurers in 2011 Q1: Swiss Re

Canada’s property and casualty insurance industry saw a 13.7% decrease in profits, slower premium growth, an elevated combined ratio and a decreased investment yield in 2011 Q1, according to Swiss Re.

In its Canadian Property & Casualty Quarterly for June 2011, Swiss Re reported the Canadian property and casualty industry’s after-tax profits declined by $115 million in 2011 Q1, down to $721 million. The industry’s capital increased by 0.4% over the same period.

Direct premiums grew by 2.9% in 2011 Q1, compared to 4.6% over the same period last year. Specifically, property premiums were up 3.1% (to $2.4 billion), driven mainly by 6.5% growth in personal property.

The industry’s combined ratio deteriorated by 1.5 points, moving up from 96.9% in 2010 Q1 to 98.4% in 2011 Q1. Swiss Re says this was the result of large cat losses in the first quarter of 2011.

Finally, the Canadian P&C industry’s yield on invested assets (including realized capital gains) declined to 3.6% in 2011 Q1 compared to 4% in 2010 Q1.

Alberta names committee to gauge effectiveness of wildfire management programs

Alberta’s government has named an independent committee to look at how well it fought the May 2011 fires and the effectiveness of its wildfire management programs.

The Slave Lake fire is Canada’s second most costly natural disaster, with an estimated $700 million in insured losses.

The review will also look at weather and timber conditions leading to the catastrophe.

“What this is not is a review of the overall emergency response that fell on that region during this terrible time when the fires actually did destroy so much personal and public property,” Bill Sweeney, a former RCMP deputy commissioner and chairman of the committee, told The Globe & Mail.

The committee’s mandate is broad and Sweeney said he wants to focus on the prevention of wildfires through programs such as FireSmart.

Regulation

Brokers ask feds to take cautious approach to demutualization

Canadian brokers have asked the federal government to take a cautious approach to demutualization.

In a submission to the federal government, the Insurance Brokers Association of Canada (IBAC) has asked the Department of Finance to keep in mind the important role of property and casualty mutual insurers in the Canadian marketplace when considering new regulations that would allow mutual property and casualty insurers to demutualize.

In particular, IBAC notes property and casualty mutuals serve as “a bulwark against financial fragility”
in the industry, raising the average minimum capital test score for the industry as whole.

Also, IBAC says, concerns about declining participation among mutual policyholders should be addressed by
focusing on communicating the value of mutuals rather than the “quick fix” of demutualization.