Ontario auto becoming industry crisis point

Ontario’s auto market is quickly becoming the main crisis point for the insurance industry, as loss ratios, particularly in accident benefits, climb to unprofitable levels, warns Joel Baker, president and CEO of MSA Research Inc., in the latest MSA/Baron Outlook Report.
In the Ontario auto insurance market, for the first nine months of 2007:
the accident benefits loss ratio sat at about 95%;
third-party liability had a ratio of 70%;
physical damage hovered just above 60%; and
the total direct loss ratio for Ontario auto was about 75%.
“In the absence of meaningful cost-containment reforms, politically-sensitive auto rate increases are required to curb Ontario statutory accident benefit losses,” Baker wrote.
The personal and multi-line sector as a whole turned in a nine-month, 2007 combined ratio of 97% up from 93% for the same period in 2006, Baker said.
Underwriting income for the sector is down 55% (to about Cdn$500 million) for the first three quarters. It stood at about Cdn$1.5 billion over the same period in 2006, he added.
Overall net income for this sector was down 18.4% down to Cdn$1.8 billion for the nine months ending in 2007 versus Cdn$2.2 billion in the 2006 period, Baker noted.