Net income drops, direct written premiums rise at Desjardins General

Desjardins General Insurance Group announced Thursday its financial results for the three months ending March 31, reporting net income of $25.4 million on direct written premiums of $482.4 million.

The Levis, Quebec-based property and casualty carrier said first quarter net income was 59.2% lower this year than last year due to “unusually favourable weather” in 2012. Direct written premiums were up 6.1% from the first quarter of 2012.

“The combined ratio in the quarter was 99.8%, 10.9 percentage points higher than in Q1 2012,” Desjardins stated in a press release.

“We are increasing our marketing activities and planning other initiatives to improve sales,” including its launch of usage based auto insurance in Quebec and Ontario, Desjardins General president and chief operating officer Sylvie Paquette stated in a press release.

“We are confident that our leadership with (usage based insurance programs) will have a significant impact on our growth and profitability.”

Earlier this month, Desjardins General announced the launch of Ajusto, its usage based auto insurance program in Ontario and Quebec, which is free to Desjardins policyholders. Ajusto was approved by the Financial Services Commission of Ontario (FSCO) and uses a device made by iMetrik Solutions Inc. of Montreal, which plugs into the diagnostic ports of vehicles made in 1998 or later. It measures factors such as milage and driver behaviour including hard braking and acceleration.

Desjardins also stated Thursday it is “closely monitoring” the proposal in the Ontario budget released May 2 to aim to reduce the average consumer’s premium by 15%.

“We understand the desire to reduce the cost of auto insurance in Ontario, but any reduction in rates must be offset by corresponding measures to reduce claims costs,” Paquette stated in the release. “All indications from the government are that they understand this reality and will act prudently.”

In its budget for the 2013-14 fiscal year, the ruling minority Liberal Ontario government announced measures designed to reduce the average premium by 15% but the timeline would be “prescribed by regulation.”

These measures would include giving FSCO the authority to require insurers to file rates, requiring insurers to offer lower rates for consumers with save driving records and to have FSCO reduce the return on equity benchmark for rate filings, which is now 12%.

Last March, when Desjardins released its 2012 financial results, the carrier said changes in Ontario auto in 2010 resulted in improvement for Desjardins.

In September 2010, the Ontario government introduced a $3,500 cap on payments for accident benefits classified under the minor injury guideline. It also reduced medical, rehabilitation and attendant care benefits in the standard auto policy (SAP) for non catastrophic injuries. Before, the standard auto policy required $100,000 in medical and rehab coverage but now the SAP only requires $50,000, though policyholders have the option to buy additional coverage.