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Facts of the Property and Casualty Insurance Industry in Canada 2016 Is Published by Insurance Bureau of Canada (IBC)

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Facts of the Property and Casualty Insurance Industry in Canada 2016 Is Published by Insurance Bureau of Canada (IBC) of the Property and Casualty Insurance Industry Facts in Canada 2016 Facts of the Property and Casualty Insurance Industry in Canada 2016 is published by Insurance Bureau of Canada (IBC). IBC is the trade association representing Canada’s private property and casualty (P&C) insurance companies. Since 1972, IBC has published Facts to provide a snapshot of the state of the P&C insurance industry. The data in Facts 2016 come from several national and international sources, including IBC. Data are from 2014, 2015 or 2016, depending on when sources released their information. In some instances, figures may not add up to 100% as a result of rounding. Also, because sources collect data in different ways, there can be small differences among similar data. 38th edition, 2016 ISSN 1197 3404 © Insurance Bureau of Canada. All rights reserved. President’s message he time has come to get serious about earthquake symposiums – one in British Taddressing climate change in Canada. Columbia in 2014 and another in Quebec in And IBC is ready. 2015 – we’ve laid the groundwork for earthquake preparedness. For more than a decade, IBC has been reporting on a rise in claims as a result of increases in While IBC’s climate change efforts advance, some severe weather events related to climate of our auto insurance files remain a challenge. change. We shared these alarming figures We have made progress on the Ontario Auto with consumers and knocked on the doors of insurance file, but consumers in the province provincial and federal governments to alert are still paying too much for car insurance. Also politicians of the costs their constituents are in need of reform is auto insurance in Alberta. facing. We urged government officials to create The industry is working with both provincial a robust culture of resilience. governments on reforms to save drivers money. In addition, we are monitoring automobile While our reports garnered accolades from innovations and their effect on insurance. climate change experts, governments were focused on other priorities. There are certainly challenges ahead, but I remain optimistic. Canada’s P&C insurance industry is Then in May 2015, Albertans elected a new healthy and strong. Our industry is striving to government on a platform that included flood meet these new challenges with innovative new mitigation efforts. A few months later, Canadians products for our customers’ changing needs. elected a new government in Ottawa that These are exciting times! pledged $5.6 billion over the next four years in “green infrastructure,” including flood mitigation systems. IBC has developed a Natural Catastrophe Strategy for Canada that encourages the industry and federal government to collaborate on two risks Don Forgeron – flood and earthquake. We’re in discussions President and CEO, with the federal government on a collaborative Insurance Bureau of Canada national flood program. And by hosting two IBC Facts 2016 1 Contents Canada’s P&C insurance industry, all sectors Section one 4 Industry at a glance - updated to 2015 6 Premiums - updated to 2015 8 Insurance dollar - updated to 2015 3–24 9 Claims - updated to 2015 10 Taxes and levies 12 Operating expenses - updated to 2015 13 Profit - updated to 2015 16 Catastrophic losses - updated to 2015 24 Regulation and regulatory issues Canada’s P&C insurance industry by line of business Section two Auto insurance 26 Mandatory insurance 26 Optional insurance 25–48 27 “No-fault” insurance 28 What’s mandatory where 40 Premiums and claims 41 Average losses 42 Major issues Home insurance 44 Types of coverage 45 Premiums and claims 45 Major issues Business insurance 47 Types of coverage 48 Premiums and claims 48 Major issues Insurance organizations Section three 50 IBC members 55 IBC offices 56 IBC services 49–62 57 Superintendents of insurance 59 Insurance-related organizations 2 IBC Facts 2016 Canada’s P&C insurance industry, all sectors 4 Industry at a glance - updated to 2015 6 Premiums - updated to 2015 8 Insurance dollar - updated to 2015 9 Claims - updated to 2015 10 Taxes and levies 12 Operating expenses - updated to 2015 13 Profit - updated to 2015 16 Catastrophic losses - updated to 2015 24 Regulation and regulatory issues 1 IBC Facts 2016 3 Industry at a glance 42.2% of direct written premiums were for car insurance in 2015 Of its $161.7 billion in total assets, the P&C insurance industry had $114.6 billion in Property claims as a invested assets in 2015 percentage of total claims have risen significantly over the In 2015, Canadian last decade insurers wrote $51.9 billion in direct written premiums for 30.9% insurance on consumers’ homes, cars and businesses $8.2 billion – the amount the P&C insurance 24.4% industry contributed in taxes and levies to federal and provincial governments in 2014 The P&C insurance industry employed 122,500 people across Canada in 2015 More than 207 private P&C insurers actively compete in Canada More than half of every dollar of revenue received by insurers is paid out in claims 51.1% - claims paid out to policyholders 20.7% - operating expenses including employee compensation 16.0% - taxes and levies 8.2% - profit margin IBC Facts 2016 5 Premiums Insurance premiums are determined based on risk. Insurers consider the likelihood of a customer (or a group of customers with the same set of circumstances) making a claim, and how much those claims will likely cost. The price for premiums is based, in part, on an insurer’s best estimate of the amount it will be required to pay out in claims on the policies it wrote in any given year. Insurers pool the premiums of their many policyholders to cover the losses claimed by the few in that year. Along with covering claim costs, premiums are calculated to cover taxes, operating expenses and expected profits. The requirement to estimate future costs is a unique challenge Top 20 private P&C insurers by direct written in the insurance business. Most businesses can calculate the premiums, 2015 actual costs of producing and selling a product before the Rank Company % selling price is determined. However, when setting premiums, 1 Intact Group 15.59 P&C insurance companies can only estimate the costs of the 2 Aviva Group 8.05 medical treatments, car repairs or house repairs they will have 3 Desjardins Group 8.02 to pay in the future. 4 TD Insurance Group 6.02 Consumers often find this confusing and are unsure about what 5 RSA Group 5.60 a premium represents. Many think of their premiums as a bank 6 Wawanesa Mutual Insurance Company 5.37 account – it is there just for them in case of a loss. But that’s not 7 Lloyd's Underwriters 5.28 how it works. 8 Co-operators Group 5.23 9 Economical Group 3.93 Insurance companies report premiums in two ways. Direct 10 Travelers Group 2.91 written premiums are the total amount of premiums that a P&C 11 Allstate Group 2.69 insurance company receives in one year. Net written premiums 12 Northbridge Group 2.51 are direct written premium amounts plus reinsurance written 13 AIG Insurance Company of Canada 2.27 premium amounts minus reinsurance ceded premium amounts. 14 Chubb Group 2.04 There are more than 207 private P&C insurers actively 15 RBC Group 1.84 competing in Canada to sell insurance policies on homes, cars 16 Zurich Insurance Company Ltd. 1.84 and businesses. 17 La Capitale Group 1.72 18 Genworth Financial Mortgage Insurance 1.58 In 2015, private Canadian insurers wrote $51.9 billion in direct 19 Guarantee Company of North America 0.89 written premiums ($47 billion in net written premiums) for 20 Green Shield Canada 0.89 insurance on consumers’ homes, cars and businesses. Sources: IBC, MSA 6 IBC Facts 2016 Of the $47 billion in net written premiums, 43.9% was for one Specialized lines of insurance, such as boiler and machinery, line of business: automobile, including commercial vehicle marine and aircraft, and surety and fidelity, make up about 7% insurance. (Figures do not include government-owned auto of the business. The smallest portion of the business is accident insurers in British Columbia, Saskatchewan, Manitoba and and sickness insurance, which a few P&C insurance companies Quebec, which exclusively provide the compulsory component sell. Most of this type of insurance is sold by life and health of auto insurance in those provinces.) Personal property, insurers. commercial property and liability made up most of the rest. Net written premiums (NWP) in $000,000, 1992 to 2015 Personal Commercial Auto NWP property NWP property NWP Liability NWP Other NWP Total NWP 1992 7,763 2,642 1,866 1,319 913 14,502 1993 8,158 2,803 2,062 1,298 918 15,239 1994 8,697 3,042 2,337 1,430 975 16,482 1995 9,403 3,163 2,553 1,694 1,258 18,071 1996 9,597 3,246 2,658 1,867 1,202 18,570 1997 9,553 3,281 2,711 1,878 1,185 18,608 1998 9,686 3,383 2,469 1,823 1,198 18,559 1999 9,839 3,293 2,434 1,846 1,315 18,728 2000 10,705 3,429 2,591 1,982 1,471 20,178 2001 11,281 3,481 2,768 2,194 1,519 21,242 2002 13,150 3,971 3,909 3,145 3,333 27,507 2003 15,781 4,452 4,518 4,081 2,581 31,413 2004 16,415 5,079 4,802 4,357 2,622 33,275 2005 16,430 5,315 4,820 4,600 2,698 33,864 2006 16,590 5,621 4,985 4,826 2,943 34,964 2007 16,758 6,033 4,997 4,766 3,540 36,095 2008 17,140 6,495 5,001 4,624 3,438 36,698 2009 18,126 7,013 5,313 4,667 3,068 38,187 2010 18,977 7,598 5,568 4,726 3,416 40,285 2011 20,239 8,192 6,014 4,817 3,533 42,794 2012 20,690 8,565 6,136 4,502 3,758 43,653 2013 21,089 9,024 6,339 4,731 3,823 45,007 2014 21,295 9,791 6,621 4,781 4,143 46,632 2015 20,630 10,187 6,656 4,988 4,547 47,009 Sources:
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