Aviva Canada’s first-half experience in personal lines

Aviva Canada’s 2023 half-year results in personal lines are a mixed bag, with strong results on the personal property side, but the insurer is taking initiative to shore up its personal auto results.

Overall, the company reported half-year growth of 8% in personal lines and 17% in commercial lines, contributing to a 2023 half-year combined ratio of 92.8% (undiscounted). (A story on the company’s commercial lines will be published Thursday.)

On the property side, the results benefited from a relatively benign Cat season thus far relative to last year. However, the insurer still has its eye on potential claims losses related to Canada’s active wildfire season.

Meanwhile, the combination of auto theft, Alberta’s auto rate cap, and the return of auto claims frequencies to historical norms has the company’s auto COR hovering around 100%. “That’s not where we want it to be,” Aviva Canada’s CEO Jason Storah told Canadian Underwriter in an earnings call Wednesday.

In personal property lines, the Cat season thus far has been relatively benign for Aviva compared to previous seasons, Storah reported, despite a steady stream of stories about the impact of climate change in the media.

“During the first half of the year, our results were definitely helped by a reasonable Cat season,” Storah told CU Wednesday. “It’s interesting, right? Because you think about the headlines in the media — on Cat events, [wildfire] smoke pollution — there’s definitely been a lot of media coverage on it. But for the most part, I think that hasn’t translated through to massive insurance losses. Having said that, these things can change very, very quickly.”

In particular, Storah referenced the wildfires approaching within 16 kilometres of Yellowknife, the capital of Northwest Territories, which had a population of just under 20,000 people as of the 2016 Census. Parts of the city are under evacuation order. Meanwhile, 90% of Enterprise, NWT, has been destroyed by wildfire, according to media reports.

Related: What’s behind Aviva Canada’s 2023 Q1 growth

But while personal property lines seem to be stable for the moment, Aviva has been active in trying to bring down its loss ratio in personal auto lines.

“Our personal auto COR is around 100%,” Storah said. “That’s not where we need it to be. We want it to be in the mid-nineties.”

Storah cited a number of factors affecting the claims experience in the company’s personal auto book of business. The same factors are happening to auto insurers industrywide.

“[There have been] some challenges in Alberta around the ability to get rate [increases because of a legislated cap],” Storah said. “Although I would say we’re cautiously optimistic about the outlook since the [Alberta May 2023] election and the dialogue that we’re having with the government regulator out there.

“And then in Ontario, Quebec…auto thefts are up 50% year over year. We’ve done a number of things about that. We’re certainly engaging with regulators, with law enforcement.”

Aviva Canada has also offered ‘tag’ devices to its insured drivers. These radio frequency identification devices are installed on the vehicle’s parts to mark them as stolen property. A wireless tracking system, supported by 24/7 monitoring, allows any car on which parts are installed to be trackable anywhere in North America.

“So far in the first half of the year, we’ve only had about 25% take-up,” Storah reported on Aviva’s tag initiative. “Going forward, [we are] trying to encourage brokers and consumers to take us up on these type of devices because we know that has an impact on theft, and on [auto] losses and recoveries.”

Meanwhile, auto claims frequency is on the uptick because claims frequency is on the uptick following the pandemic as vehicular traffic returns to pre-COVID normal.

Feature image courtesy of iStcok.com/Nelosa

Editor’s Note: Tomorrow, CU will report on Aviva Canada’s commercial lines results and outlook