Quebec auto insurance posts growth in 2005

The Qubec automobile insurance industry posted further growth in 2005, reporting an overall operating income totalling 16.8% of earned premiums up slightly from the 16.6% generated in 2004.Losses in 2005 (3.0%) grew at a slower pace than earned premiums (3.2%), according to the Autorite des marches financiers (AMF). The findings came from the 2005 annual report on Qubec automobile insurance rates tabled recently in the National Assembly by Finance Minister Michel Audet. “The report highlights the solid position of the Qubec automobile insurance industry, a situation that can only be in the interest of consumers,” the AMF announced on its Web site. “In this regard, the decline in rates reported in 2005 for a third consecutive year reflects a market that is operating efficiently and for the benefit of consumers.” The AMF noted the auto insurance market in Quebec includes 105 firms, although it added Quebec’s auto insurance market is “still dominated by a small number of insurers or insurance groups.”Despite the concentration, the AMF maintains the market remains competitive and that competition varies from one market segment to another. “Again this year, the demand for insurance products and the ensuing volume of written premiums were on the rise as a result, in particular, of the renewal of the automobile fleet, coupled with a jump in the number of insured vehicles and holders of driver’s permits,” the AMF reported.”Moreover, further to a review of changes made to rate manuals, a ceiling seems to have been reached with respect to refinements carried out to classification and rate criteria used by insurers, particularly with respect to passenger cars. Nonetheless, to maintain their competitiveness and enhance customer loyalty, insurers continue to adjust rating practices based on the terms and conditions in place at each institution.” The substantial level of operating income earned in the past five years, combined with higher demand, is expected to sharpen future rate competition in Qubec for all risk categories related to auto insurance, the AMF reported.