Canadian Market (September 01, 2009)

CLIMATE NOT A GOOD BAROMETER FOR P&C 2009 Q1 RESULTS

The weather in 2009 Q1 was not as bad as it was during the same period last year, but the underwriting results of Canadian property and casualty industry took a beating nonetheless, according to the 2009 Q1 MSA/Baron Outlook Report.

According to MSA, the industry’s net income was Cdn$322.3 million in 2009 Q1, down 45.3% from the Cdn$588.8 million profit the industry reported in 2008 Q1.

The MSA figures exclude data from ICBC, MPI, SAF, Lloyd’s and some Quebecregulated insurers.

On the positive side, the industry wrote 3.6% more net premium in 2009 Q1 than it did in 2008 Q1. And the industry’s underwriting loss for 2009 Q1, at

Cdn$179.2 million, was less than the Cdn$341-million hit it took in the same quarter of 2008.

“Industry underwriting results as at the first quarter of 2009 show some improvement over the first quarter of last year, but the difference is negligible once the effect of reserve discounting is stripped out,” MSA president Joel Baker writes in the report. “The undiscounted industry combined ratio [in 2009 Q1] came in at 100.7[%] versus 100.01[%] in [2008 Q1].

PLAINTIFFS SEEK LEAVE TO APPEAL ALBERTA CAP LEGISLATION TO SUPREME COURT OF CANADA

Alberta’s auto cap legislation will be challenged at the Supreme Court of Canada.

The Alberta Court of Appeal ruled in June that a

Cdn$4,000 cap on insurance claims for minor auto injuries does not infringe the Canadian Charter of Rights and Freedoms.

The plaintiffs in Alberta Court of Appeal case, Peari Morrow and Brea Pederson, have instructed their counsel to seek leave to appeal the decision of the Alberta Court of Appeal to the Supreme Court of Canada.

Fred Kozak, counsel for the plaintiff, confirmed his clients’ instructions in an email correspondence with Claims Canada magazine.

Kozak went on note that he expects to complete the application brief and supporting documents later this summer. The filing deadline is Sept. 11, 2009.

ALBERTA AUTO RATES TO DECREASE BY 5% IN NOVEMBER 2009

Basic auto insurance rates in Alberta will decrease by 5%, according to the province’s Automobile Insurance Rate Board (AIRB).

The rate reduction follows public hearings in which the Insurance Bureau of Canada called for a 6.4% rate increase.

According to the AIRB, the decrease is mainly a reflection of the Alberta Court of Appeal’s decision to uphold the province’s Minor Injury Regulation, which restores the cap on the amount an individual can claim for minor soft-tissue injuries.

Expected claims and administrative costs, in addition to declining investment rates and increasing claims costs for insurers, were taken into account when proposing the rate decrease, the AIRB notes in a release.

The decrease will take effect Nov. 1, 2009.

VANCITY SELLS P&C SUBSIDIARY TO THE CO-OPERATORS

Vancity, Canada’s largest credit union, has agreed to sell Vancity Insurance Services Limited (VISL), its subsidiary for home, auto, travel and business insurance, to The Co-operators.

The price tag of the deal, which is subject to regulatory approvals, was undisclosed.

VISL is a wholly owned subsidiary of Vancity that provides insurance through 17 retail branches in Greater Vancouver and Victoria, as well as an inbound call centre.

The VISL portfolio includes approximately 28,000 residential, 48,000 auto, 10,000 travel and 2,000 commercial insurance policies.

Under the terms of the agreement, The Co-operators subsidiary, Federated Agencies Limited, will acquire VISL, including all its service locations on Sept. 1, 2009.

Squamish Insurance Services is not part of the purchase agreement and will continue operations as usual.

2009 KELOWNA WILDFIRES SMALLER THAN FIRES OF 2003

Several wildfires raged through the Kelowna area of B. C. in August, forcing more than 11,000 residents to evacuate their homes.

As of press time, the 2009 fires were collectively about 7% of the size of the Kelowna fires in 2003, which resulted in 3,385 insurance claims totalling Cdn$200 million.

And while the fires ate up the province’s trees, a combination of factors — including wind patterns and risk management practices such as clearing up potential fuel sources around properties — have thus far contributed to preventing huge property losses in 2009.