Ugly trend in auto claims so far this year: OSFI data

Federally regulated Canadian property and casualty insurers have paid out $535 million more in auto claims during the first quarter of 2018 than they did during the same period last year, according to financial results posted by Canada’s solvency regulator.

Net incurred claims costs in the auto line increased 16.4% in 2018 Q1, according to data released by the Office of the Superintendent of Financial Institutions (OSFI).

Direct written premiums, in contrast, have remained more or less flat, decreasing by 1% during the first quarter this year compared to the same time last year.

In private passenger and commercial auto insurance lines, Canadian and foreign insurers regulated by OSFI wrote a total of $11.135 billion in premiums during this year’s first quarter, down slightly from the $11.249 billion they wrote in 2017 Q1.

OSFI’s data bears out the observation by several individual insurers that claims inflation in auto lines is an issue across the country. The industry cites a variety of contributing factors, including increased frequency of collisions because of distracted driving, as well as increased severity due to the cost and complexity of physical damage repairs.

For Canadian insurers regulated by OSFI, the auto claims ratio nudged up over the 80% mark in 2018 Q1, sitting at 81.63%

Foreign insurers underwriting auto in Canada saw their claims ratio markedly decrease from 89.7% during the first quarter last year down to 61.4% this year.

Property claims are also trending up, OSFI data show, although not to the degree seen in auto.

Insurers paid out $87 million more in personal and commercial property claims during the first quarter this year than they did last year – a 3% increase.

The impact of increased claims in property lines may be muted, however, because insurers wrote $313.2 million more business in 2018 Q1 than they did last year.

Direct written premiums for Canadian and foreign insurers in property lines jumped from $3.55 billion in the first quarter of last year to $3.86 billion in 2018 Q1 – an increase of 8%.