New index measures quarterly premium rate trends in Canadian personal lines

Applied Systems has released its Applied Rating Index, measuring the quarterly premium rate trends being experienced by consumers, brokerages and insurers across the Canadian market.

Stephane Lacasse, vice president of product management for Canada and rating products with Applied, told Canadian Underwriter in a briefing before the index’s release Wednesday that the rate insights will enable brokerages to provide guidance on expected premium rates during renewals and when evaluating new policies. For insurers, it will provide a data-backed reference point to determine competitive rates.

Calling it the “Canadian insurance industry’s only data-driven index to provide insight into premium rate change,” Applied said that the index measures average premium rates for personal auto and property lines of business on a quarterly basis. The report analyzes more than 1.3 billion quotes completed, measuring the increase or decrease in average premium rate trends across the country. Applied reports that the index, which is fully anonymized, represents more than 80% of the brokerage market and 675 insurer rating plans written by brokers.

“The Applied Rating Index depicts the best representation of how consumers are impacted by premium changes based on real consumer quotes,” Lacasse said. Other reports may report an average of premium changes for all insurers, Lacasse said, noting that this differs from Applied’s index, which represents the average of the top 3 insurers quoted to a consumer. In addition, other reports may have rate filings effective at different times, depending on insurers and may not accurately reflect premiums changes within the reported quarter.

In Q1 2018, average premiums for both personal auto and property lines increased compared to the same quarter in 2017. Notably, each province experienced an increase in both personal auto and personal property except for the personal auto lines in the Atlantic provinces and personal property lines in British Columbia. Key findings include:

• Personal auto: In Q1 2018, personal auto premiums increased by 2.2% versus Q1 2017. Personal auto premiums declined -1.6% versus Q4 2017.
• Personal property: In Q1 2018, personal property premiums increased by 2.9% vs. Q1 2017. Personal property premiums increased by 0.5% versus Q4 2017.
• Provinces: Average premiums for personal auto and personal property increased in nearly all provinces over the past year.

Some provincial highlights (Q1 2018 premium rates compared to Q1 2017):

• Personal auto premium rates in Alberta increased year-over-year 5.8% on average; personal property rates in Alberta increased 7.9% on average;
• Personal auto premium rates in the Atlantic provinces decreased 2.5% on average, while the average increase in personal property was 5.5%;
• Increase in personal auto in Ontario was 1.5%; personal property was similar at 1.6% increase on average;
• In Quebec, personal property premium rates increased 0.1% year-over-year on average, while personal auto rates increased 5.2%;
• B.C. saw an average 0.7% decrease in personal property rates;
• Saskatchewan and Manitoba saw a 1.4% increase in personal property rates.