Canadian First-Quarter Weak

Business conditions for the Canadian property and casualty insurance industry remained weak for the first quarter of this year, with auto and personal property showing increased loss ratios across Ontario and Atlantic Canada, says Paul Kovacs in the Insurance Bureau of Canada’s (IBC) quarterly industry analysis. Commercial rates are, however, showing signs of improvement after several years of significant price declines, observes Kovacs.

The first quarter figures are based on loss ratio data compiled by the Insurance Information Centre of Canada (IICC) and not that of Statistics Canada which was unable to report on the period due to system problems.

The poor company results for the first quarter resulted from generally soft market conditions across the provinces as well as losses incurred from the January snowstorm in Toronto. However, Kovacs notes, 1999’s first quarter figures are considerably stronger than that of the same period last year — which were impacted by the Quebec and Eastern Ontario ice storm — suggesting that the industry’s financial performance for this year will be modestly better should no unexpected catastrophe losses occur.

There was considerable variation in performance across the country, Kovacs says. Atlantic Canada produced weaker numbers in all lines while Ontario auto losses rose. The Quebec market is showing significant improvement year-on-year with British Columbia achieving more modest improvement. The Alberta market remains under price strain, Kovacs adds.

The Ontario auto loss ratio for the first quarter of this year came in higher at 74.5% than last year’s 73.2% with the ratio in Atlantic Canada rising to 84.7% from 82.6%. In contrast, the prairie market produced a lower auto loss ratio of 76.5% compared with last year’s 83.2%, Quebec at 76% from last year’s 101.9%, and British Columbia clocking in at 59.1% from 61.3% for the same period in 1998.

On the investment front, Kovacs expects this years figures will show improvement on 1998 which, coupled with less likelihood of a major weather loss occurring and thereby providing for fairer underwriting conditions, the industry should deliver a better overall result for 1999. “Gains this year will be modest, but they should help carry toward a noticeably stronger performance next year if there are no significant adverse surprises from Y2K, the greatest unknown in current market projections.”