Ontario’s personal auto accident loss ratio surpasses 140% in 2010

Ontario’s personal auto is driving the Canadian property and casualty market’s underwriting loss, said Joseph Burtone, assistant vice president at A.M. Best.
Burtone offered a summary of the Canadian property and casualty market at A.M. Best’s ‘Market Briefing: Canada’ in Toronto on Sept. 8.
Overall, the industry appears to be stable, with positive – not robust – results. This does not mean, though, that it is not without its challenges.
The property and casualty industry reported an underwriting loss of approximately $207.4 million in 2009, Burtone said. Combined ratios for the segment improved from 2008’s 101.2% to 100.9%.
In auto personal accident, on the other hand, by year-end the net loss ratio of this line rose to 137.6% from 116.6% at year-end 2008.
In the first half of 2010, the loss ratio has continued its upward trend reaching 141.3% by the end of June, Burtone told delegates.
Reforms were implemented on Sept. 1 to help stem the losses in auto personal accident. But Burtone said A.M. Best shares the industry’s concerns about the effectiveness of the reforms.
“We realize why the reforms were put in place, we know what they’re supposed to do, but we have concerns about how they’re going to be priced, what are insurers going to do to make sure that reserving is accurate and what is the [level of] consumer confidence [in the reforms’ effectiveness]?”
Burtone also noted personal property lines have seen an increase in frequency and severity of claims – specifically in wind, hail and water-related claims.
But the industry appears to have recognized it needs to better mitigate these risks. He noted that at year-end 2009, the loss ratio for this line was 75.9%; by the end of June 2010, it was 59.2%.
“We’re finding pricing segmentation, we’re seeing inspections being done more frequently and more broker evaluations. But, there are some concerns with aging infrastructure and this line is very competitively priced.”