April 12, 2005 by Canadian Underwriter
Coming off a disastrous 2003, the Facility Association (FA) the industry’s risk sharing mechanism to cover high-risk drivers is reporting stronger results in 2004, with lower losses and reduced numbers of drivers in the system.
At the FA’s annual general meeting in Toronto on Tuesday, chairman Andrew Cartmell told members two factors led to the improvement in results. First, prior year loss ratios improved, with 2002’s ratio dropping from 101% to 91%, and 2003’s ratio diving from 104% to 93%. Part of the change in 2003 loss estimates comes from the significant amount of new business which poured into FA at the end of that year about 40% of 2003’s premiums were written in the last quarter of the year.
Overall, FA population has dropped to 203,000 from 306,000 over the past year, noted CEO David Simpson, in a prepared statement read by FA deputy chair Bob Tisdale (Simpson is currently on medical leave). Simpson points to efforts made by the FA, as well as the Insurance Bureau of Canada (IBC) and provincial broker associations, to move as many drivers back into the voluntary market as possible.
Overall combined ratio for 2004 was 71.4%, well off the 166% ratio produced in 2003.
In Ontario, FA’s biggest market, marketshare dropped to 3.3% last year from 5.4% and the combined ratio improved dramatically to 70% in 2004 from a whopping 204% in 2003. In Alberta, marketshare dropped slightly to 3.0% from 3.2% over the same comparative period, while the combined ratio fell somewhat to 88.1% from 95%.
On the East Coast, New Brunswick had the strongest results, with marketshare down to 2.5% from 4.5% between 2004 and 2003, while the combined ratio dropped to 32% from 104% over the same period.
Nova Scotia actually saw FA marketshare increase, rising to a historic high of 7.7% in 2004 from 7.1% in 2003, but the combined ratio did improve over the same period to 59% from 127%.
And in Newfoundland, the FA’s marketshare fell by one percentage point to 6.5%, while the combined ratio improved by more than 60 percentage points to reach 69% in 2004.