Home Breadcrumb caret News Breadcrumb caret Claims Canadian P&C industry definitely in soft cycle: Swiss Re Although 2007 was a profitable year for Canada’s P&C industry, “it is increasingly clear that the soft phase of the insurance cycle is now upon us,” Swiss Re reported in its 2008 Q1 Canada Property & Casualty Quarterly. “Net income declined 15% from 2006 as rising claims eroded underwriting margins and volatile financial markets kept […] By Canadian Underwriter | May 1, 2008 | Last updated on October 30, 2024 2 min read Although 2007 was a profitable year for Canada’s P&C industry, “it is increasingly clear that the soft phase of the insurance cycle is now upon us,” Swiss Re reported in its 2008 Q1 Canada Property & Casualty Quarterly. “Net income declined 15% from 2006 as rising claims eroded underwriting margins and volatile financial markets kept investment results in check. Absent favourable reserve releases, which accounted for nearly a third of the industry’s profits, the results would have been a lot worse in 2007.”In fact, Swiss Re is predicting Canada’s property and casualty industry will post a 96% combined operating ratio (COR) at the end of 2008, up from the 92.4% posted at the end of 2007. [The industry’s COR was 89% in 2006.] Swiss Re noted the Canadian P&C industry’s return on equity (ROE) declined from 21% in 2006 to 16% in 2007. The ROE is expected to fall another five percentage points, down to 11%, by the end of 2008.Catastrophe losses in Canada increased from Cdn$135 million in 2006 to Cdn$175 million in 2007, Swiss Re observed. This is still a far cry from the Cdn$920 million in losses posted in 2005. But the overall claims trend is following an upward direction, Swiss Re says. “Overall claims incurred grew by 6% in 2007, but if the favourable reserve releases are added back in, then claims incurred would have grown by 12-13%,” the Swiss Re quarterly reports. “Loss ratios deteriorated in almost every line of business, but most sharply in personal auto insurance, and within that in the personal accident benefits category…”We expect overall loss ratios to continue to worsen in 2008.” Canadian Underwriter Save Stroke 1 Print Group 8 Share LI logo