Intact to launch usage-based auto insurance in Ontario in April

Intact Financial Corp. stated Wednesday it plans to launch usage-based insurance in Ontario in April and will drop rates, by 5% on average, by targetting discounts to safe drivers.

In the management discussion and analysis of its 2013 financial results released Feb. 5, Toronto based Intact referred to the Ontario government’s mandated 15% reduction, over two years, in private passenger auto insurance rates.

Intact stated it “will be reducing rates by 5% on average, targeting discounts to safe drivers” in Ontario, and that “one strategy to identify safer drivers will be our launch of usage based insurance in Ontario in April 2014.”

The MD&A did not provide further detail on how exactly it will distribute usage-based insurance in Ontario, but last November, Intact had announced plans to launch telematics-based auto insurance in Quebec and that it would roll out similar programs in other jurisdictions in subsequent months.

Intact sells insurance under its own brand through brokers and through its BrokerLink subsidiary. It also sells non-standard auto in Ontario under the Jevco brand, and directly to consumers under the belairdirect and Grey Power brands.

Intact released Wednesday its financial results for the 2013 calendar year, reporting a 244% increase from 2012 in fourth-quarter catastrophe claims, a slight drop in expense ratio year over year and a drop in commercial property and casualty premiums due to a reduction in earthquake exposure.

In its MD&A, Intact noted its direct premiums written increased 7% year over year, from $6.868 billion in 2012 to $7.319 billion in 2013. Fourth-quarter DPW increased 1% year over year, from $1.69 billion in the three months ending Dec. 31, 2012 to $1.702 billion in the fourth quarter of last year.

Current-year catastrophe claims were $55 million in the fourth quarter of 2013, up 244% from $16 million during the last three months of 2012. Those losses were “attributable primarily to the December ice storm and an early-November wind and rain storm,” according to the MD&A.

Intact Financial reported its combined ratio for the full year increased from 93.1% in 2012 to 98.0% in 2012. For the fourth quarter, the combined ratio increased from 92.1% in 2012 to 96.3% in 2013.

“2013 was marked by severe weather events, resulting in $781 million of insured losses from catastrophes or $530 million net of reinsurance,” Intact stated in a press release. “As a result, net operating income for the year was $500 million, down $175 million from 2012.”

In its MD&A, Intact reported that its total net claims were up 16%, from $4.0052 billion in 2012 to $4.692 billion in 2013. Fourth-quarter net claims were up 15% year-over-year, from $1.052 billion in 2012 to $1.209 billion in 2013.

The claims ratio for the full year 2013 was 66.9% (up from 61.6% in 2012), while the expense ratio in 2013 was 31.1%, down from 31.5% in in 2012. In Q4 2012, the expense ratio was 31.7%, dropping to 29.3% in the three months ending Dec. 31, 2013.

In personal lines, total direct premiums in 2013 were $4.994 billion, of which $3.373 billion was in auto and $1.621 billion was in property. In commercial lines, Intact recorded $2.325 billion in direct premiums written, of which $612 million was in auto and $1.713 billion was in property and casualty.

“Commercial P&C DPW declined 1% in Q4-2013 versus the same quarer of 2012 as our efforts to reduce the earthquake exposure of our portfolio were successful,” Intact stated in its MD&A.

The combined ratio in commercial auto was 93.3% in 2013, up 11.8 points from 81.5% in 2012. In commercial P&C, the combined ratio was 103.9%

“A $117 million increase in catastrophe losses and a $73 million reduction in favourable prior year claims development drove the 12.3 point increase in the combined ratio,” Intact stated of its commercial results for the full year.

In personal auto, Intact reported a combined ratio in 2013 of 93.2%.

Net investment income was up 4% year-over-year, from $389 million in 2012 to $406 million in 2013. Net income dropped 25%, from $571 million in 2012 to $431 million in 2013. Fourth-quarter net income dropped 40%, from $177 million in 2012 to $107 million in 2013.