By: Luke Jones, Published on September 5, 2017 07:29 PM, Last Update on September 28, 2017 10:31 AM
In its latest report, A.M. Best says the auto personal accident loss ratio in Canada “remains a concern” and auto insurance providers in the country are feeling the effects of increased distracted driving and higher repair costs.
During last year, the ratings firm said the auto personal accident market saw an increased loss ratio for the third consecutive year. On August 31, 2017, the company reported that loss and loss adjustment ratio in auto personal accident deteriorated a further 1.5 points to 89.6% in 2016, compared to 88.1% in 2015.
“This line remains a concern, given that the loss ratio has deteriorated each year since 2012,” said Oldwick, N.J.-based A.M. Best in the report, Canadian Property/Casualty and Life Remain Stable as Economy Rebounds, While Housing Market Bears Watching.
Auto lines are “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 reported.
The overall P&C market in Canada had net premiums written of $41.1 billion through 2016, a 4.1% increase from $39.6 billion the year before. Auto premiums grew 5.9% during last year.
“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.
“Approved rates decreased on average 1.38% when applied across the total market for the 2016 calendar year,” A.M. Best reported. “This puts the average decrease since August 2013 at about 8.3%, or a little over halfway to the government’s goal.”