Canadian Underwriter
News

Canada’s GDP in good shape, but insurers still concerned about low interest rate environment


June 4, 2010   by Canadian Underwriter


Print this page Share

Although Canada’s economy has had a “fantastic” first quarter, there is still quite a bit of uncertainty in the global financial environment, which has a knock-on effect on the Canadian property and casualty industry, Louis Gagnon, president of Intact Insurance, told delegates of the Young Brokers Council Annual Conference in Toronto.
“Canada enjoyed 6.1% growth in GDP in the first quarter [of 2010],” he said. “This is unseen for anyone who is 40 years old or younger.”
But, he cautioned, the robust growth in Canadian GDP does not make the Canadian markets immune to events on the world stage. Interest rates, still depressed, will have a huge impact on insurers’ loss ratios, and hence pricing.
“We believe we are still in an environment that will continue to have a very low interest rate,” he said. “And for every percentage point of investment income we receive, that is the equivalent of 3% of improvement in loss ratios.
“This is huge. Everything that affects the market will affect our pricing, because at the end of the day we need to bring a return to our shareholders.”
On the world stage, the economic turmoil in Greece, Portugal and Spain and the level of debt in the United States concerns everyone, particularly as it contributes to the ongoing suppression of interest rates, Gagnon said.
“We are a global market. What’s happening in Greece, Portugal or Spain has an impact on us because our banks are involved in those things,” he warned. “These are our biggest concerns when looking at our investment portfolio.”


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*