Canada’s largest insurer is dropping its urge for food for writing Alberta auto enterprise.
And that’s due to the province’s ongoing cap on auto insurance coverage charges, Intact CEO Charles Brindamour mentioned in the course of the firm’s 2024 Q2 earnings name.
The speed cap, carried out firstly of this yr, prevents insurers from rising premiums above 3.7%. Many insurers have expressed it’s difficult their profitability.
“Our personal urge for food on this province is decreasing, I’d say, at a fairly good velocity,” mentioned Brindamour. “At this stage, we expect there are very clear options on the desk. We shared these with the federal government. The ball is of their courtroom.”
Intact wrote $1.1 billion in Alberta auto premiums in 2023, giving it a market share of 27.2%, in line with Canadian Underwriter’s 2024 Stats Information, which makes use of information provided by MSA Analysis.
Brindamour reported Intact is bolstering its advertising and marketing funds for auto jurisdictions the place it makes probably the most sense to put in writing the enterprise. As a result of in different Canadian provinces, Intact desires to “lean in” to writing auto enterprise within the present setting.
“I’d say the exception right here for me stays Alberta, the place there’s this synthetic cap that’s under inflation,” Brindamour mentioned.
Insurers are awaiting results from the federal government’s public session on auto reform. Within the meantime, a number of have begun to take different measures — together with decreasing capability, and even exiting the market altogether.
“It’s very arduous for the trade and consequently gamers, as anticipated, began to exit this market,” says Brindamour. “I do assume that if the cap stays in place, you’ll see extra exit from the market.”
Two corporations lately introduced they’d cease providing auto insurance coverage in Alberta.
Aviva Direct is withdrawing its auto and residential insurance coverage companies from Alberta efficient January 2025. Definity’s subsidiary Sonnet is phasing out its auto insurance coverage in Alberta in December 2024. The businesses, respectively, cited enterprise progress and profitability as their cause for exiting.
And Zenith Insurance Company terminated its relationship with an Alberta brokerage that was promoting its auto insurance coverage in the course of the province’s 2023 charge cap (which was renewed in 2024 for an undetermined interval).
Auto arduous market to proceed
Throughout Canada, Intact ’s private auto premium grew by 11% — up 4 factors because the final quarter — as a consequence of sturdy charge will increase and buyer progress, the corporate mentioned in its 2024 Q2 outcomes. The corporate’s mixed ratio in auto is 91.4%.
However total, the P&C insurance coverage trade faces profitability challenges in auto. And it’s pursuing corrective actions to charges due to it, Brindamour says.
“As such, we anticipate arduous market circumstances to prevail over the following 12 months and trade progress to be within the double digits.”
Within the Canadian P&C trade as an entire, Lamy mentioned he’s seen mixed ratios north of 100% for private auto.
“On our aspect, we’re writing charges in low double-digits proper now,” Lamy mentioned of Intact’s auto charges. “And with the speed approval that we now have already obtained, we’re anticipating to remain on the present charge degree for the rest of the yr.
“We’ll adapt our technique in every province based mostly on the native outlook on tendencies and inflation. And nationally, we’re already rate-adequate. Outdoors of Alberta, we’re in a superb place to execute on charges the place we want them and once we want them.”
Function picture by iStock.com/YinYang
