Canadian Market (May 01, 2010)

NEW BRUNSWICK’S HOME INSURANCE MARKET SHOWING SIGNS OF “INSTABILITY”

New Brunswick’s Consumer Advocate says the province’s home insurance market is showing signs of “instability.”

“One of the biggest issues is the fact that home insurance premiums are on the rise,” the Consumer Advocate says in its 2009 annual general report. “This is due to increased flood claims and increased rebuilding costs.

“Under-insurance is another issue that has caused some required adjustments in coverage and thus resulting in adjustments in premium levels.

“There appears to be some signs of instability in the market and hopefully this will not result in issues of availability and affordability as we experienced in auto insurance, not too long ago.”

FACILITY ASSOCIATION “SURPRISED” BY STABLE, DECLINING VOLUMES

Facility Association (FA) volumes have not gone up as expected, raising a few eyebrows among FA executive members.

“I am very pleased to report we have, so far, genuine reasons to be surprised,” FA president and CEO David Simpson said in his address to the association’s 2010 annual general meeting in Toronto. “Residual market volumes are stable or declining in almost all jurisdictions.”

The market share of the Residual Market segment across Canada was 0.5%, down marginally from 0.6% in 2008 and 0.7% in 2007.

In some jurisdictions, P.E.I. and Ontario, most notably, the share of the Residual Markets was at an all-time low (2% for P.E.I. and 0.1% in Ontario).

FA is a kind of market of “last resort,” guaranteeing insurance coverage for higher-risk drivers that can’t find insurance in the voluntary insurance market.

ONTARIO AUTO INSURANCE RATES CONTINUE CLIMB IN 2010 Q1

Ontario auto insurance rates continued their upward climb in 2010 Q1, with the province’s auto insurers getting approved rate increases averaging 5.61% when weighted by market share.

“The rate changes approved in 2004, 2005, 2006, 2007, 2008 and 2009 were -10.60%, -2.43%, 1 .27%, +0.55%, +5.59% and +8.77%, respectively, for the entire market,” the Financial Services Commission of Ontario (FSCO) noted in a quarterly release announcing the rate changes.