What industry-wide claims ratios were like for the first half of 2021

Canada’s federally-regulated property and casualty insurers collectively made an after-tax profit of $4.23 billion on direct written premiums of nearly $32 billion during the first half of 2021, recently-released regulatory data shows. Most major lines had claims ratios below 55%.

The federal Office of the Superintendent of Financial Institutions has posted the Q2 financial data for P&C insurers that it regulates for the second quarter.

Those figures are year-to-date, meaning the Q2 is the total for both Q1 and Q2, not just for the three months ending June 30.

Canadian Underwriter added up the figures for both Canadian and foreign property and casualty insurers.

The loss ratio is about 51%, if you add up the total net incurred claims – including adjustment expenses – of $13.26 billion ($10.745 billion and $2.518 billion for Canadian and foreign insurers respectively) and divide that by total net premiums earned of $25.8 billion ($20.442 billion and $5.382 billion for Canadian and foreign insurers respectively). That data does not include mortgage insurers.

Total claims and adjustment expenses, for the industry, were about $21.37 billion for the first half of the year. That includes the reinsurers’ share.

The total underwriting income was $4.52 billion.

Not every line of P&C insurance was profitable.

The loss ratio in professional liability was nearly 100%, with net claims incurred of $455 million and net premiums earned of $460 million.

On the other hand, the industry has had a very profitable year on homeowners insurance so far, with net premiums earned of $5.536 billion and net claims incurred of $2.609 billion, for a loss ratio (when blending the results of both Canadian and foreign insurers) of about 47%.

Another money-making line – at least according to the Q2 figures – was directors’ and officers’ liability.  Net claims incurred were $56.72 million while net premiums earned were $363.9 million. Total claims were $180.4 million, with reinsurers bearing the brunt of the costs. That said, insurers have been concerned for some time with loss trends in directors’ and officers’ liability, with many imposing double-digit rate increases.

Commercial general liability (with products) had a loss ratio slightly below 55%, with recorded net claims incurred and adjustment expenses of $881 million ($508 million and $373 million for Canadian and foreign insurers respectively) on net premiums earned of $1.625 billion ($826 million and $799 million for Canadian and foreign insurers respectively).

The federally-regulated private passenger auto insurers also did well so far during the first six months of 2021. Net claims incurred and adjustment expenses were $4.854 billion while net premiums earned were $8.551 billion.

Feature image via iStock.com/alexsl