Canadian Underwriter
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Moments in Time (July 01, 2004)


July 1, 2004   by Canadian Underwriter


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Bermuda – a new world wide insurance centre on the horizon

By Allan Symons, president IMG Ltd.

June, 1979

Twenty-two square miles and barely 55,000 people within its boundaries, Bermuda has become one of the world’s hotspots for insurance – a capacity reserve untapped and growing continuously.

The capital of this marvelous island, no larger than Stanley Park in Vancouver, is Hamilton, and this is home to just under 1,000 registered insurance companies. The insurance industry represents over 14% of the gross national product of Bermuda, but unfortunately must import the majority of employees owing to its specialized nature. Bermuda has by far become the centre of captive and offshore insurance companies as a result of its geographical location, its accessibility for transportation, its lawyers and accountants knowledgeable in the aspects of insurance.

Bermuda currently is handling over $2 billion in premiums each year. Projections for 1980 will see the total premiums handled through Bermuda exceeding the combined writings of Lloyd’s of London.

Insurance Exchange commission sore spot with Alberta agents

By Frank McDonald

January, 1978

The 52nd annual general meeting of the Alberta agents was obsessed, as the last few have been, with finding a satisfactory solution to the residual auto market.

The newest invention, the Facility Association, a Canadian adaptation of the “Florida Plan” of which so much has been written this past year, has a proposed Canadian start up date of next July. Most observers expect that experiment to be tried out first on the Alberta motorists.

Generally speaking, Alberta agents like the concept of the Facility Association and they are desperate to try anything that might prove better than what they now have – the Exchange. However, the method of operation as laid out in the FA’s Statistical and Operating manuals once again raises agents’ hackles.

To discuss two major points of difference: the commission to be paid on this new class of business will be less than the standard commission, and the premium must be collected in full and sent in full (including the agent’s commission) to the carrier company along with the application.

Editorial: How to start an exodus

By Kenneth E. MacLeod, Managing Editor

October, 1976

Annual meetings of Canada’s Superintendents of Insurance are hardly where one goes for high drama.

Seeking to break the format that has developed over the years, Chairman Gordon French of Newfoundland asked for more input from individual members of the audience and on one subject Supers got plenty. The topic, and it was raised by an agent from Mr. French’s own province: the arbitrary powers bestowed on rate boards whose decisions need not be justified or explained, and the effect of these decisions on the insurance markets within a province.

Mr. French has, of course, a classic example of what can happen under such circumstances going on right now in Newfoundland. In that province, the Newfoundland Auto Insurance Board (NAIB) recently turned down an IAO submission for a 32% liability rate increase in the private passenger sector, despite the insurers’ contention that is was reached on an actuarially sound basis. The board’s decision: 8%.

The result: the market began drying up in short order with agents receiving the “no new business” and “no renewals” word from a large number of their companies. The exodus from business was on.

Experience improves again but AIB cuts into profits

By Ken MacLeod, Managing Editor

Statistical Review, 1977

“Rough Justice” is what the former chairman of the Anti Inflation Board (AIB) termed the dictums handed down to Canadian business in an effort to curb double digit inflation in this country.

A noble motive, but:

In the case of the general insurance industry last year, AIB guidelines were rough enough, no doubt about that, but how just they were, or even how sensible, is a moot point.

Wherein lies the justice in permitting companies fortunate enough to have had good experience during their base periods a better deal in terms of retained underwriting profit than those – the majority – less fortunate in this respect.

Wherein lies the sense in forcing companies to plan for an underwriting loss and to live off investment income – the road to disaster when stocks and bonds slump.

Because of AIB stipulations anachronisms abound in this issue of CU. Companies that should be ranked in the profit producing company tables will be found among those reporting underwriting losses, after provision has been made for so-called excess revenue.

1976 results:

Industry underwriting loss$35.7 million

Primary market loss ratio66.11%

Reinsurance loss ratio73.24%

Top writers:

Royal Insurance7.83% market share

Lloyd’s of London3.91% market share

Commercial Union3.39% market share

Travelers Group2.92% market share

Shaw & Begg2.29% market share


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