February 12, 2018 by Greg Meckbach
Intact Financial Corp. plans to apply nation-wide for rate increases in personal auto, a move to improve the firm’s profitability in personal auto insurance.
“In terms of additional rate actions in 2018, we are expecting a further 5% [increase] in rate in 2018,” Darren Godfrey, senior vice president of personal lines for Intact Insurance, said February 7 during a conference call with financial analysts.
“We have already received approval for additional rate increases to date in 2018, and we have a number of further filings currently with regulators for approval,” Godfrey said, adding the company “will continue to evaluate and apply for further rate increases if necessary.”
Intact’s combined ratio in personal auto was 101.2% for the three months ending Dec. 31, 2017, up 0.3 points from 100.9% in Q4 2016. For the full year, the combined ratio in personal auto was 101.7% in personal auto, up 1.8 points from 99.9% in 2016.
Intact Financial Corporation CEO Charles Brindamour told analysts the firm aims to reduce its combined ratio to the mid-90s in personal auto.
In 2017, new technologies and more expensive car parts increased the cost to repair a car, driving up Intact’s auto claims costs. “Cost pressures related to physical damage are more recent and have accelerated in the last few quarters,” Brindamour said. “That is why we have meaningful rate increases in the pipeline across the country.”
In Ontario, auto insurance claims costs have “continue to rise” while the rate of accidents have fallen, David Marshall, a special advisor to Finance Minister Charles Sousa, wrote in a report released in 2017. Marshall contended, among other things, that high legal costs drive claims costs up.
In 2013, the Ontario government tried to force the industry-wide rate down 15% over two years but this did not happen by 2015. Among other things, the Ontario government reduced the mandatory coverage required for first-party accident benefits and changed the definition of catastrophic impairment, which triggers an entitlement for $1 million in medical and rehabilitation coverage.
Ontario has an election scheduled this June. “When it comes to elections, I think automobile insurance is not at the top of list of things that Ontarians are concerned about,” Brindamour said on February 7. But he added auto rate increases “might become political.”
When the Liberals has a minority government in 2013, the New Democratic Party supported its 2013-14 budget bill on the condition that the province force auto premiums down 15%.
And it seemed like only yesterday, Intact bought One Beacon for C$2.3B. Now don’t get me wrong, I understand that one needs to spend money to make money and they did not have all that lying around, that is, except the “$200M in excess capital”…. https://www.intactfc.com/English/media/press-releases/press-release-details/2017/Intact-Financial-Corporation-Completes-Acquisition-of-US-Specialty-Insurer-OneBeacon-Insurance-Group-Ltd-and-Announces-Executive-Appointment/default.aspx
My Intact Insurance combined home and car rates went up at least 15% in each of the last two years and I had no claims. I hate to think what it would have been should I have had a claim! This is to increase profitability? Good Lord, does the CEO and his close support staff not make enough money? I can understand (and agree with) a company making a “reasonable” profit but a 15% per year increase to the customer seems a bit outrageous to me. I can look for another insurance company, but methinks they probably each know what the other is doing (somehow) and so attempt to keep up, and that’s putting it nicely. Oh sure, Intact can explain away their high increases with figures and which side of the ledger such and such goes. They can quote statistics until we are all blue in the face and our ears are bleeding but I would hazard a guess the bottom line will be well into the black at year’s end and the CEO will be smiling broadly with his take home pay. If I am wrong I stand corrected, if not, well, go figure (no pun intended). There now, that’s off my chest!!! No blame to the poor folks at Intact who have to explain away to the customer the high increases. That must make for one heck of a stressful day.
Intact is being a corporate jerk. i will not pay an extra three hundred dollars a year just to assist in their increased profitability. I’ll find someone else, and even if the price differential is minimal, I’ll be happy to tell them what to do with their rates and where they can shove them.
Just renewed our car and truck insurance here on Vancouver Island. Used Intact last year Dec 17 for top-up on basic ICBC coverage. No accidents or claims – Intact increase overall for each vehicle is 38.5% !
Of course insurance is now struggling with the storms and big claims…but…our house insurance with them did not go up !!!
DOES NOT MAKE SENSE…..
I have no idea how they expect to increase profits if they loose costumers over rate increases. Great company when it came to claims but double the amount for the same coverage from another provider is a not even a choice so long Intact you just made yourself a unsustainable option financially.