January 2, 2018 by Rowan Saunders
The continued deterioration and loss trends in automobile insurance and the impact of climate change will be the two biggest trends affecting Canada’s property and casualty insurance market in 2018.
Auto is a challenge in many parts of the country, including the Atlantic provinces, Ontario, Alberta, and British Columbia. Provinces will have to make the necessary reforms within the product itself or insurance providers will need to continue taking rate. B.C. is a very good example of where we will soon see some of the highest rates in the country. The government-run monopoly is not properly limiting bodily injury losses and payments to customers and the indemnity payments are outrageously high each time. We’re seeing the costs of primary auto insurance in the province go up as a result. In Ontario, we are encouraged by the Marshall Report and the potential for improvements when the report’s recommendations are implemented. However, we still think there’s much to do to build a sustainable auto product in Ontario that’s affordable to most.
With climate change, we firmly believe scientific evidence proves that the occurrence of weather events is going to increase. Year 2016 provided lessons for the entire Canadian P&C industry. Given a trend of higher-than-normal catastrophe losses right across the country, individual insurers must be able to provide the best protection and service we can to our customers, while also protecting our businesses. The increasing frequency and severity of hail storms, tornadoes, and water losses in some parts of the country is making it more challenging to provide coverage for those exposures. As an industry, we must underwrite and rate those exposures accordingly, which is not going to make us very popular.