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Facility Association volumes across Canada stabilize at relatively low levels.


April 8, 2010   by Canadian Underwriter


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Facility Association (FA) volumes have not gone up as expected, raising a few eyebrows among FA executive members.
FA numbers increased significantly in 2003-04, when auto insurers in Canada faced rising claims costs in a hardening market. Similar auto insurance market conditions are present now in 2009-10.
And yet, thus far, insurers have not responded to these market conditions by placing more risks in the residual markets. FA is a kind of market of “last resort,” guaranteeing insurance coverage for higher-risk drivers that can’t find insurance in the voluntary insurance market.
“I said last year, given the ‘lagging indicator’ nature of residual volumes, that most of us would be genuinely surprised if volumes did not go up last year or this,” Facility Association president and CEO David Simpson said in his address at FA’s 2010 annual general meeting in Toronto.
“I am very pleased to report we have, so far, genuine reasons to be surprised. Because…residual market volumes are stable or declining in almost all jurisdictions.”
The market share of the Residual Market segment across Canada was 0.5%, down marginally from 0.6% in 2008 and 0.7% in 2007.
In some jurisdictions, P.E.I. and Ontario, most notably, the share of the Residual Markets was at an all-time low (2% for P.E.I. and 0.1% in Ontario).