YINAC Insurance Center

AXA reports increased P&C revenues in 2008 Q1

2008-05-07T22:54:10Z

AXA reported its 2008 Q1 property and casualty revenues increased by 2% to EUR8.885 million (Cdn$13.74 billion), up from EUR8.625 billion (Cdn$13.33 billion) in 2007 Q1.
"This solid performance resulted from positive new business volumes with personal motor and household net new contracts reaching 246,000 and 17,000 contracts, respectively, as well as prices holding up well across the board," the company noted in a press release.

Most of the growth in motor revenues happened in the Mediterranean and Gulf Regions, with growth in motor revenue in Turkey reaching 16%.
In Canada, AXA reported 2008 Q1 revenues of EUR232 million (Cdn$358.6 million), a 4.4% increase on a comparable basis from its 2007 Q1 result of EUR217 million (Cdn$335.5 million).
Globally, the company noted its growth in France was up 3%, growth in the Mediterranean Region was up 8%, and growth in Asia reached 16%.
This growth "was partly offset by a flat contribution from the United Kingdom and decreases in Switzerland and Germany (both down 1%)," the company noted in a press release.
Overall, Axa's personal lines business, representing 57% of the company's property and casualty premiums, was up 2%.
Commercial lines business, representing 41% of P&C premiums, was also up 2%.

Ontario auto rates increase in 2008 Q1

2008-04-22T16:29:22Z

Ontario auto rates are on the rise, according to data posted by the Financial Services Commission of Ontario (FSCO), the regulator of the province's insurers.
Rate applications approved for 2008 Q1 averaged +1.05%, based on the entire market, FSCO noted in an online bulletin.
Rate changes approved in 2004, 2005, 2006 and 2007 were -10.60%, -2.43%, -1.27% and +0.55%, respectively, for the entire market.
In 2008 Q1, for the 43.37% of the market that had rate changes approved, the average rate change was +2.42%, when weighted by market share.

Among the companies in Ontario with a market share of 1% or greater, here are the approved rate changes shown for each insurance company:

ING Insurance Company of Canada
Rate Change: +2.02%
Market share 7.73%

Pilot Insurance Company
Rate Change: +3.02%
Market share: 6.14%

Economical Mutual Insurance Company
Rate Change: +3.10%
Market share 5.76%

Co-operators General Insurance Company
Rate Change: -0.73%
Market share 4.65%

Personal Insurance Company
Rate Change: +6.04%
Market share 3.32%

Traders General Insurance Company of Canada
Rate Change: +4.10%
Market share 3.31%

Nordic Insurance Company of Canada, The
Rate Change: +3.36%
Market share 1.80%

Farm Mutual Reinsurance Plan Inc.
Rate Change: No change
Market share 1.63%

Scottish & York Insurance Company Limited
Rate Change: +3.02%
Market share 1.62%

COSECO Insurance Company
Rate Change: +2.90%
Market share 1.31%

York Fire & Casualty Insurance Company
Rate Change: No change
Market share 1.29%

The rate changes listed above represent the average rate change for each particular company. They do not necessarily reflect the impact of the rate change on individual consumers.
The impact of a rate change on an individual consumer will vary depending on where the consumer lives, the type of car he or she is driving and other risk characteristics.

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Desjardins launches direct arm in Ontario

2008-03-25T22:44:23Z

Desjardins General Insurance (DGI) is now offering direct home and auto insurance in Ontario.

"We've been planning and researching our launch into the Ontario mass market for some time," Jean-Francois Chalifoux, general manager and senior executive vice-president at DGI said in a company release. "We believe there is a significant opportunity for a true direct provider because Ontario is far behind the U.S., Europe and even Québec in the penetration rate of direct insurance," he said.
"That being said, even in Ontario the trend is clearly in favour of the direct model, and we feel that we are well-positioned as a low-cost provider to both accelerate and benefit from that trend."
As of 2006, DGI held 9.4% of the market share for "damage insurance" in Quebec, according to a 2007 Autorite des marches financiers (AMF) release.
In Quebec, direct writers deliver about 52% of property and casualty insurance.
In Ontario, about 51% of insurance consumers buy their insurance products through the independent broker channel, whereas 38% buy from agents or direct markets, according to a 2007 independent consumer survey commissioned by the IBAO.
"We are launching in a big way and will be blanketing the province with the Desjardins General Insurance name," Chalifoux said. "That's because we recognize that we have a big job to do creating awareness of this new insurance brand in Ontario."

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Carriers should offer long-term policies to homeowners in hazard areas

2008-03-24T22:42:18Z

In an effort to better manage risks during a period of large-scale catastrophes, insurers should consider offering long-term policies to homeowners in hazard-prone areas.
"Such a long-term policy could be tied to a mortgage, and home improvement loans can encourage the adoption of cost-effective mitigation measures," says a report co-authored by the Wharton University of Pennsylvania, the Insurance Information Institute and Georgia State University.
"A program of insurance vouchers, similar in concept to food stamps, could assist low-income residents in disaster-prone areas to purchase adequate insurance coverage."
The report found that, among other things, most homeowners in hazard-prone areas consider only premium payments, without taking into consideration the benefits of protection, when considering their insurance purchases.

"They often choose low deductibles, are influenced by budget constraints and are likely to underestimate the risk," says the report, entitled 'Managing Large-Scale Risks in a New Era of Catastrophes.'
Similarly, many homeowners "do not mitigate [the potential of disaster to] their homes because they cannot justify the up-front cost relative to the perceived benefits..."
At the same time, the report notes, if regulators require insurers to suppress rates, then premiums will not reflect the risks and private carriers may not be able to offer appropriate levels of insurance.
Offering long-term homeowners' insurance is one among a series of other recommendations contained in the report.
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AIG suffers US$5 billion loss in 2007 Q4

2008-03-04T19:25:11Z

American International Group, Inc. (AIG) reported loss of US$5.3 billion for 2007 Q4, and a net income of US$6.2 billion for the full year 2007, representing a 55.9% decrease over the prior year.
In 2006 Q4, AIG reported a profit of US$3.4 billion. "The 2007 other-than-temporary impairment charges resulted primarily from the significant, rapid declines in market values of certain residential mortgage-backed securities in the fourth quarter, for which AIG cannot reasonably determine the recovery period will be temporary," the company reported in a statement.

AIG president and CEO Martin J. Sullivan said "AIG's results in 2007 were clearly unsatisfactory."
The year was challenging, he continued, because the "deterioration of both the U.S. residential mortgage and credit markets significantly affected several of our operations and investments."
The company's domestic brokerage group and foreign general experienced improved underwriting results in 2007 Q4, a company statement says. But the improvements were offset by a US$348-million operating loss in mortgage guaranty and a US$184-million operating loss in personal lines (compared to a 2006 Q4 operating income of US$79 million).
The decline in personal lines was due to "losses and reinstatement premiums related to the California wildfires, unfavourable loss reserve development in prior-accident years, primarily in agency auto, an increase in the current-accident-year loss ratio and transaction and integration costs related to the acquisition of the minority interest in 21st Century Insurance Group," the release says.
"Strong private client group premium growth was offset by declines in the direct and agency auto segments."

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Focus on micro-solutions

2008-03-03T19:22:51Z

In order to respond to the rising costs of climate change-related damages, insurance companies are going to have to focus more on micro-solutions (i.e. on a policyholder-by-policyholder basis), Colin Empke, partner at Blaney McMurtry LLP, told delegates at the Canadian Defence Lawyers 4th annual insurance coverage symposium in Toronto on Feb. 28.
Empke was speaking on behalf of Anthony Saunders, partner with Guild, Yule and Company, who was unable to attend the symposium.
Empke observed an increasing number of weather-related insurance losses, causing the industry to seek ways to deal with increasing costs and solvency issues.

One set of solutions is known as micro-solutions, and these are at the policyholder level, Empke said. Such solutions approach underwriting and claims on an individual, case-by-case basis; they make more realistic assessments about individual risks and how they might be affected by climate change.
Another approach insurers are taking is the macro approach. This focuses on more general activities that try to change the risk environment by activity promoting climate change activities, such as controlling greenhouse emissions or sponsoring research.
These are admirable goals, Empke said. But while they might assist in slowing the rate of climate change, it's not going to assist in the short-term. And it's not likely to affect risk assessment, he added.

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Kingsway reports decreasing profits

2008-02-15T23:09:54Z

Kingsway Financial Services Inc. (TSE:KFS) reported a net loss of US$103.5 million for 2007 Q4 and a net loss of US$18.5 million for the year, marking a decrease of 716% and 115% over the same periods of 2006, respectively.
The combined ratio was 130.2% in the quarter (109.3% for the year), with Canadian operations reporting a combined ratio of 99.8% (95.0% for the year), a Kingsway release says.

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Fitch says U.S. P&C industry should be aiming for 95% COR in 2008

2008-02-04T22:42:02Z

Fitch Ratings says the U.S. property and casualty insurance industry will need to produce a combined ratio of about 95.5% in 2008 in order to meet the goal of an 11% return on surplus.
Fitch made this observation in a report outlining the rating agency's five-factor model for determining return on surplus. The five factors in the forecasting model include:
• combined ratio (underwriting losses + expenses)/net premium;
• investment yield (investment income/invested assets);
• operating leverage (net premium/surplus);
• asset leverage (invested assets/surplus); and
• tax rates (the level at which pre-tax income is taxed).
For the purpose of forecasting into 2008, the ratings agency assumed operating leverage to be 0.8x, asset leverage to be 2.4x and a tax rate at the long-term average effective rate of 23%.

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Repair shops losing tradespeople

2008-01-28T22:37:37Z

Forty per cent of collision repair centres responding to a Canadian Collision Industry Forum (CCIF) survey noted they have suffered a loss of tradespeople within the last year, potentially affecting the cycle times of car repairs and, as a result, affecting insurers' costs.
On average, a collision repair shop has five technicians on staff, the research found. But these same shops reported they have lost an average of two tradespeople in the last 12 months, Jay Perry, the owner and founder of Automotive Business Consultants (ABC), told attendees at a January 2008 CCIF meeting in Toronto.
"That's huge," he added. "If you consider the initial statistic of five average techs and then you've lost two in the last 12 months we are losing a lot of people to a lot of other trades and there are a myriad of reasons for that."

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The Co-operators adds two new members

2008-01-24T20:26:18Z

The Co-operators has expanded its membership, welcoming two new members — the Canadian Worker Co-operative Federation (CWCF) and Fédération des coopératives québécoises en milieu scolaire/COOPSCO.
The new members bring to 39 the number of co-operatives, credit unions and like-minded organizations that make up the ownership group of The Co-operators Group Ltd.

More details.

Quebec travellers cash in on risk management offer

2008-01-03T23:41:59Z

Thousands of Quebecers will be travelling on the dime of an online travel risk management service, thanks to more than five inches of snow that fell at Pierre Elliot Trudeau International Airport in Montreal.
itravel2000's Let it Snow promotion offered Canadian consumers who booked a qualifying package vacation, hotel or flight by Dec. 7, 2007 for departures up to Apr.30, 2008 the chance to be reimbursed for the retail price of their vacation package if more than five inches of snow fell at airports in Calgary, Halifax, Montreal or Toronto on New Year's Day.
The online travel retailer entered into an agreement with WeatherBill, an online weather risk management service, to receive insurance coverage for the promotion.

"We maintain a strong supply of capital for paying out even these huge sums," David Friedberg, WeatherBill CEO and co-founder, said in an itravel2000 release.
Under the terms of the agreement, WeatherBill would provide up to Cdn$100 million in snow coverage.
"Our significant risk capacity and simple, automated service for managing weather risk and promotions is the perfect solution for the large scale of 'Let it Snow,'" Friedberg said in a WeatherBill release when the two companies initially announced the agreement. "WeatherBill eliminates the time, expense and hassle of typical promotions — there's no unnecessary paperwork, redemption process or waiting for payment.
"itravel2000 simply purchases coverage in increments to perfectly mirror customer sales, and there are no upfront set-up costs, administrative fees, minimums or maximums."
Toronto's snowfall, at 9.4 cm, fell just shy of the required 12.7 cm to be covered under the arrangement, while Halifax and Calgary measured minimal amounts of snowfall.

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Wendy Baker resigns as president of Lloyd's America Inc.

2007-12-21T09:06:28Z

Winifred "Wendy" Baker, who in 1990 became the first woman to lead a reinsurance company, will step down after nine years as president of Lloyd's America Inc. at the end of December 2007, A.M. Best has reported.
Baker managed Lloyd's offices in Montreal, New York, Chicago, Los Angeles, Kentucky and the Virgin Islands.
Baker, who reportedly has stepped down to pursue other interests, has overseen corporate marketing and communications, broker development, distribution and compliance and regulatory issues in the Americas.
A.M. Best notes the United States is Lloyd's largest market, accounting for US$8.5 billion or around 40% of its business in 2004. ?Before joining Lloyd's in 1998, Baker had a long career at Continental Corp., advancing to become president of Continental Re in 1990.
She joined Minet Re North America, New York, as senior vice president in charge of developing new business opportunities for its reinsurance intermediary and retail and wholesale insurance brokerage operations in North America.

In a statement, Lloyd's highlighted Baker's "significant role" in greatly increasing the insurer's U.S. market presence and leading American operations through difficult periods such as the Sept. 11, 2001, attacks and the 2005 windstorms. ?A replacement for Baker will be announced "in due course," Lloyd's has announced.

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B.C. court says ICBC fails onus to prove fraud allegations

2007-12-21T00:03:30Z

The Insurance Corporation of British Columbia (ICBC) failed to prove an insured tried to defraud the corporation by faking the theft of his minivan, and B.C.'s provincial court ordered the public insurer to allow the claim.
In Brummitt vs. ICBC, Michael Brummitt filed a claim in June 2005 with ICBC that his 1999 Dodge Caravan was stolen from his driveway. A day or two later, the vehicle was recovered by police; the interior was extensively damaged by a fire that appeared to be deliberately set.
The theft occurred only days before the vehicle's insurance was due for renewal.
ICBC denied liability, alleging Brummitt took the mini-van or arranged with others to simulate a theft.
If a claimant asserts under oath that the vehicle was taken without his or her consent, the claimant does not have to prove that he or she did not participate in the loss, wrote Provincial Court of British Columbia Justice Ross Tweedale.
If the insurer alleges the claimant participated in the theft, that is an allegation of fraud the insurer must prove.
Fraud is a quasi-criminal allegation; accordingly, an insurer must prove fraud on a more stringent standard than simply a balance of probabilities, the judge wrote.
"Despite some aspects of Mr. Brummitt's evidence, his claim that his minivan was stolen is not highly unlikely," Tweedale found. He added that the evidence presented provided a basis for the conclusion that there were a number of ways for the Dodge to have been taken without Brummitt's knowledge.
"ICBC has not proven that Mr. Brummitt tried to defraud the corporation."

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U.S. reinsurers report decrease in net premiums written

2007-12-07T17:52:38Z

A group of 21 U.S. property and casualty reinsurers wrote US$17.9 billion of net premiums during the nine months ended Sept. 30, 2007, compared to US$19.6 billion in net premium written during the same period in 2006, according to an analysis conducted by the Reinsurance Association of America (RAA).
The combined ratio for the group was 94.1%, an improvement over the 95.4% combined ratio reported for the same period last year. The 2007 combined ratio takes into account a 65.6% loss ratio and an expense ratio of 28.5%, according to the RAA.
Gross premiums written totalled US$28 billion for the first nine months of 2007, and direct premiums written amounted to US$2.26 billion.
Swiss Reinsurance America Corp reported the highest gross premiums written, at US$4.1 billion. Second was National Indemnity Company, which reported US$3.3 billion.
Munich Re America Corporation reported the highest direct premiums written in the nine months ended Sept. 30, with US$5.59 million. Odyssey America Re reporting US$4.27 million.
Net underwriting gain was US$1.17 billion total for the first nine months, with nine of the 21 companies reporting a loss.

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IBC to provide data to governments on domestic oil spills

2007-12-07T17:46:20Z

The Insurance Bureau of Canada (IBC) on Jan. 1, 2008 is launching a project that will accurately track domestic oil spills in Atlantic Canada for the first time.
The data will be provided to governments as part of an effort to introduce and strengthen legislation for the installation, maintenance and replacement of domestic oil tanks.
"IBC is undertaking this project because there is a clear need to understand the extent of the growing problem of domestic oil spills," said Don Forgeron, vice president, Atlantic, of IBC. "While individual insurance companies have collected data on domestic oil tank spills for some time, this project introduces consistent reporting across the industry.

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