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Where premiums actually went down in Canada


July 17, 2018   by Jason Contant


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Average premiums for personal auto in Atlantic Canada decreased for the second consecutive quarter, according to Applied Systems’ latest quarterly rating index. On the other side of the country, in British Columbia, average personal property premiums also decreased for the second quarter.

Released last week, the 2018 Q2 index found the average premiums for personal auto and personal property increased in nearly all provinces over the past year. The only provinces to realize declines were personal auto in the Atlantic provinces (down 5.4% year-over-year from Q2 2017 to Q2 2018) and personal property in British Columbia and Quebec (down 1.5% and 2.2% year-over-year, respectively).

Aaron Sutherland, vice president of the Pacific region with the Insurance Bureau of Canada (IBC), told Canadian Underwriter Tuesday that the decrease in property premiums reflected in the report could be due to trends in severe weather across B.C. and the rest of the country. While B.C. has seen a significant fire and flood season, it didn’t reach the same degree as in other provinces such as Ontario, which saw a $380 million windstorm in May and other catastrophes around the same time.

“I think that’s why we are seeing that reflected in the premiums in this province, and that may be why we may see the decrease relative to the rest of the country,” said Sutherland.

Applied’s report found that average premiums for personal auto in Atlantic Canada decreased over the past two quarters. They decreased 5.4% in 2018 Q2 compared to 2017 Q2, and they were down 2.5% in 2018 Q1 compared to Q1 2017.

This finding appears counter-intuitive, given industry reports of auto claims inflation everywhere in the country, including in the Atlantic provinces. Wayne Ezekiel, president of AA Munro Insurance, which has 22 brokerage offices across Nova Scotia, told Canadian Underwriter in May that insurers in the province are seeking rate to rebalance pricing in their auto insurance products.

In Nova Scotia last year, direct loss ratios in auto hit 88%, escalating to 100% during the first quarter of 2018. Ezekiel observed that insurers were seeking rate increases of between 9 per cent and 9.5 per cent to make up for increased claims costs in the area.

Amanda Dean, IBC’s vice president of the Atlantic region, told Canadian Underwriter Tuesday that several factors could be contributing to the premium decrease indicated in the report. From a weather perspective, “we had a bit of an easier go” when comparing last year with this year, which would affect both home and auto policies, she said. “Atlantic Canada certainly, with the exception of Newfoundland and Labrador, is very competitive on personal lines products,” so these competitive forces may have played a role.

However, “while this is a great story, it may not last,” Dean cautioned. In New Brunswick and Nova Scotia, some claims pressures are building based on available auto insurance data. “Once claims pressures build enough, there does need to be some pressure relief.”

Finally, the cost of rate regulation in general may play a role. “The cost of filing for increases is quite expensive as well, so we may also be seeing a negative impact of the current rate regulation regime,” she said. “We might see some companies holding off until they get – or they need – enough of an increase to cover the cost of rate filings.”

According to Applied’s index, personal auto premiums in Canada overall increased by 2.1% in the second quarter of 2018 versus the prior year (but declined 0.3% versus the last quarter). Personal property premiums increased by 2.7% in 2018 Q2 compared to the prior-year quarter (and also increased 0.5% versus the previous quarter).

The fully anonymized index analyzes more than 1.3 billion quotes completed and represents more than 80% of the Canadian independent brokerage market and 675 insurer rating plans.


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