By: Luke Jones, Published on September 8, 2017 09:14 AM, Last Update on September 8, 2017 06:15 AM
Rising distracted driving, auto insurance claims, and collisions, means the auto personal loss ratio in Canada “remains a concern”. A.M. Best Company Inc. says in a recent report that the Canadian auto insurance market is struggling to manage auto personal accident lines, with the loss ratio rising for the fourth consecutive year.
In its Aug. 31 report, the ratings firm shows that the loss and loss adjustment ratio in auto personal accident in 2016 worsened by 1.5 points, from 88.1% in 2015 to 89.6% a year later.
“This line remains a concern, given that the loss ratio has deteriorated each year since 2012,” said A.M. Best in the report, Canadian Property/Casualty and Life Remain Stable as Economy Rebounds, While Housing Market Bears Watching.
Auto is “susceptible to losses brought on by distracted driving as well as continually rising repair costs, which have negatively impacted frequency and severity loss trends in the auto lines,” A.M. Best warned.
Overall, the property and casualty insurance industry (including home and auto insurance) saw premiums written of $41.1 billion through 2016, a 4.1% improvement year-on-year. In auto insurance, premiums grew 5.9%.
“The Auto Personal Accident line grew, reversing a declining premium trend in recent prior years that was driven by auto reforms and associated rate decreases implemented by The Automobile Insurance Rate Stabilization Act, the effects of which continue to evolve,” A.M. Best said in this year’s report, referring to an Ontario law passed in 2013.
The law was passed under the Liberal government and aimed to reduce premiums in auto by 15% within two years. The goal was missed, but the government continue to work towards reducing premiums in Ontario.
“Approved rates decreased on average 1.38% when applied across the total market for the 2016 calendar year,” A.M. Best adds. “This puts the average decrease since August 2013 at about 8.3%, or a little over halfway to the government’s goal.”