Canadian Underwriter

Despite auto market uncertainty, Facility Association numbers in Ontario and Alberta remain “low and stable”: broker FA reps

September 14, 2009   by Canadian Underwriter

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Despite international market turmoil, uncertainty around minor auto injury caps and increasing claims costs related to Ontario’s accident benefits, Facility Association (FA) volumes appear to remain low and stable in most jurisdictions, broker representatives to FA have reported. 
“Residual markets in Ontario continue to be surprisingly stable, with the Facility Association Residual Market (FARM) private passenger market share at 0.2% as at the end of June (2009) or just under 12,000 vehicles,” Ontario FA broker representative Peter Blodgett indicated in an annual report to the Insurance Brokers Association of Canada (IBAC).
“That’s down from 0.3% at the same time last year.”
The number of vehicles being transferred to Ontario’s risk-sharing pool in 2009 is tracking very closely to 2008, when 2.4% of vehicles were shared by the end of the year, Blodgett reported.
Similarly, “from a residual market perspective, Alberta has been relatively stable in the last 12 months,” Alberta FA broker representative Thom Young reported to IBAC.
“As of the end of June, the count of private passenger vehicles insured through the residual market segment stood at 6,410 or 0.2% of the private passenger market,” Young reported. “That’s down marginally from .3% market share for the same period last year.”
Also, volumes in Alberta’s risk-sharing pools showed a decline relative to the same period last year, he said.
Alberta grid volumes declined from 142,274 written exposures in the 12 months ending June 2008 down to 125,425 over the same period in 2008-09. Non-grid volumes went from 69,967 exposures as of the 12 months ending June 2008 to 53,207 exposures as of June 2009.
“These low and (so far) stable volumes likely come as a surprise to many in our industry given the state of international financial markets and the significant and rapid deterioration of Ontario automobile insurance loss ratios (especially in accident benefits),” Blodgett observed.
“Those of us who recall the years 2001 through 2003 know how the situation can change quickly and dramatically.”