Canadian Underwriter

“No question” that Aviva Canada plans to hike auto rates: CEO

February 20, 2018   by Greg Meckbach, Associate Editor

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There is “no question” that Canada’s second-largest insurer, Aviva Canada, is contemplating country-wide rate increases in personal auto, Greg Somerville, the company’s president and CEO, told Canadian Underwriter Thursday.

The cost of repairing vehicles with advanced technologies is one factor driving up claims costs, Somerville said. Another major factor is distracted driving.

Aviva’s plans confirm that Canada’s Top 2 markets will be pursuing rate increases in personal auto lines this year.

Canadian Underwriter also contacted the country’s third and fourth largest auto insurers, Desjardins and TD Insurance (which write home and auto through Security National). Neither TD nor Desjardins were willing to share their plans for rate filings this year.

Canada’s largest insurer, Intact Insurance, announced earlier this month that it plans to apply nation-wide for rates increases in personal auto, with company officials determined to improve the firm’s profitability in personal auto insurance.

In a Feb. 7 conference call with analysts, Darren Godfrey, senior vice president of personal lines for Intact Insurance, said the insurer is “expecting a further 5% [increase] in rate” in 2018. “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 and will continue to evaluate and apply for further rate increases if necessary,” he said.

Distracted driving is a significant factor driving up claims costs, Somerville said Thursday. “It is not limited to people on their cellphone,” he said. “There are lots of activities that go on in a car that are unacceptable as far as directing people [away] from what they should be paying attention to.”

North American data suggest collisions are becoming more violent, Somerville observed. The role of distraction is illustrated by the fact that fewer accidents show signs of skid marks leading to where vehicles collided, suggesting that braking did not occur until too late, if at all.

“Both of those are proxies for people not paying attention, and obviously not even attempting – or having limited benefit of the driver attempting – to slow down before hitting something,” Somerville said. The insurer is seeing the phenomenon happen across the country, and the company is at various stages of its analysis of the impact on pricing, Somerville said.

He added Aviva is trying to “educate” regulators on “what’s required in rate relief.”

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5 Comments » for “No question” that Aviva Canada plans to hike auto rates: CEO
  1. Charles Montorey says:

    This would be a mistake on Aviva’s part. Online direct like Sonnet is going to take over personal lines market share if Intact and Aviva increase rates. Aviva is foolish and about to head down a road of self destruction, unless they are purposely trying to reduce their personal lines automobile book of business as they cannot properly handle the claim volume of their current book. Aviva could become even more of a giant if they could live with current rates or even drop them a little and build marketing around this and crush Intact.

  2. Mike says:

    In response to Mr. Montorey’s post, all Personal Auto insurers are feeling pressure. Economical just reported a 136.3% combined ratio in Personal Auto (122.5% if you take out their “strategic investments”). The fact of the matter is that larger insurers like Intact have increased their rates much earlier than the industry and in a better position to increase their policies in force as their competition catches up. It’s not just about handling the “claim volume of their current book”, but anticipating trends (like physical damage) and maintaining your underwriting discipline.

  3. Bryan says:

    Company’s like Allstate have already filed and taken rate. The company’s that are proactive will withstand the upcoming storm. Rates in Ontario’s need to go up based on all the fraud, misrep and of course like this arctical states “distracted driving”. Intact and Aviva although the biggest have the worst LR due to the fact they are buying books.. try building your own success and the profits will come!

  4. Domenic says:

    This is a war on the Broker. If Intact, Aviva and Economical are taking such a beating in the personal lines marketplace then why are their ‘Direct Writing’ subsidiaries not suffering as well? I guess Belair, Sonnet etc. are immune to the claims results of the rest of the industry.

  5. Dans says:

    Its not just distracted driving, I’ve seen DD going on since 2000 on the 400 series highways…try putting on makeup at 130 km/h on the 407 … the other issue is people NOT observing the speed limits … speeding is endemic, as is aggressive driving… yet we don’t do anything about THAT!
    The car makers are not doing anything… their ads push
    “Drive FAST” “Big Horsepower”… etc… its an entire social issue around very POOR DRIVER TRAINING, kids wanting BMW’s as first cars, the need for speed…. so how does one get society to SLOW DOWN and CHILL on the roads??? Look to the car makers and their advertisers, police enforcement, etc… GL… pretty soon it will be 3rd world demo derby out there at least in the GTA…

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