Canadian Underwriter

Aviva Canada seeks average 5% rate increase in personal home and auto lines

March 8, 2018   by David Gambrill

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Aviva Canada is putting through an average rate increase of 5% in personal home and auto lines after reporting a combined operating ratio of 102% in its 2017 year-end results.

Aviva Canada’s net written premium increased by 15% in 2017 due to a full-year contribution from RBC General Insurance, which Aviva acquired in July 2016 for $582 million. Despite that, the operating profit of Aviva Canada fell from £269 million in 2016 [about Cdn$481 million, using current exchange rates] to $78 million in 2017.

“These are disappointing results, below what is acceptable for a business of this size and potential,” Aviva Canada’s chief financial officer, Colin Simpson, said in a statement. “Our performance reflects auto insurance claims increases in both frequency and severity, catastrophe weather events, and the impact of large losses in commercial insurance.

“Difficult market trends also developed during the year, primarily with regard to personal auto in regulated markets where our pricing did not keep up with claims inflation.”

Jason Storah, Aviva Canada’s executive vice president of broker distribution, told Canadian Underwriter that claims inflation amounted to 2.9% in 2017. He said the loss trend has actually increased recently, moving up to about 3.3%.

“So, over the last year or so, we haven’t kept up with that in terms of the rate that we have in the overall book,” he said. “We’ve certainly spent a great deal of time looking at where we can increase our rates, where it is appropriate, and we’ve got about 5% increases going through at the moment. That would be a blended average.”

That average number “varies by region and line of business, but in terms of a headline number, 5% is what we’ve put though our book so far,” Storah said. “We will be looking at where we need to get more rate as well in the future.”

Escalating repair costs, distracted driving and elevated claims costs associated with auto fraud are primary factors for losses on the auto side of the book.

On the homeowners’ side, there were no major natural catastrophes last year on the order of the 2016 Fort McMurray wildfire (for which the industry paid a total of about $3.8 billion in claims) or a 2013 Calgary flood ($1.9 billion in claims).

Nevertheless, the Canadian property and casualty insurance industry as a whole paid about $1.3 billion in claims related to natural catastrophes in 2017, despite the fact that the year had no major headline events. “Those big events are what capture the attention, but what we saw last year was a number of small catastrophes — really intense rainstorms or hail,” Storah said, noting that Aviva dealt with 15 catastrophes in 2017.

“They are events that, in some instances, are over in a matter of minutes or hours. But the amount of damage they do in a small, acute space of time is quite significant. We saw a number of floods in Toronto, in the GTA, that in the space of a few hours, they came and disappeared, and they resulted in significant losses.”

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6 Comments » for Aviva Canada seeks average 5% rate increase in personal home and auto lines
  1. Donna says:

    Just received auto renewal notice – increase of over 30% for 2018 for 2 retirees with perfect driving records! Outrageous! Leaving Aviva asap and taking home and auto insurance somewhere else! So much for loyalty and good driving behaviour!

    • Michelle says:

      Hi Donna where did you end up going?
      We just received one of our insurance renewals for my husbands motorcycle, it was $750 first year, $930 second year and now they want $1100
      We are not looking forward to seeing our 2 vehicles and house renewals

  2. Naomi says:

    Just received tenant’s contents renewal at an increase of over 494%. No changes; no claims. Unacceptable and outrageous. Leaving Aviva ASAP and telling all who will listen.

  3. Sarah says:

    Just received my renewal from Aviva also and increase of $553.20 per year with combined home/auto. Called for an explanation. Had to wait for a three hour call back. The BS explanation was age of vehicle and postal code justifies a rip off in their eyes, We will also be taking our business else where. I’ll be damned if they think I’m purchasing a new vehicle to save on insurance cost! How ridiculous is that explanation!

  4. Elizabeth says:

    Same experience here. 25% increase in seasonal residence premium, no claims since we took out the policy 15 years ago, nothing about the property has changed. We had been with RBC Insurance, now bought out by Aviva. Bye-bye Aviva! And we’re also taking our (claims-free) auto and home insurance with us to our new insurer.

  5. Jim Stevens says:

    Home insurance up over 25% with no claims from 2018? They are fired!

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