By: Luke Jones, Published on August 7, 2018 08:49 AM, Last Update on August 7, 2018 05:50 AM
Following revealing its poor fiscal half-year financial results, Aviva Canada is seeking to change how it approaches its business by diversifying. The core goal is to avoid the deteriorating situation in the Ontario auto insurance market. This means the second largest property and casualty insurer in Canada will reduce its exposure in Ontario and put more focus on other provinces.
“When you look at Aviva’s business in Canada, there’s a heavy concentration in Ontario auto,” Aviva Canada president and CEO Colm Holmes told Canadian Underwriter.
“So, what we’ve been looking at is, how do we diversify the business such that we are not exposed to a single product risk within Canada? So, we are looking to grow in our Global Corporate and our Specialty business. We’re also looking at what I call our home insurance business, and risk prevention and risk management.”
The obvious result of the change of tactic is spreading the reach of Aviva Canada away from Ontario and into other Canadian markets.
“We’re actually very excited about the future and the opportunities that are out there, but it’s going to take a lot of hard work and some hard yards before we get there,” said Holmes.
Aviva Canada has described its first half 2018 financial results as “disappointing” after announcing an operating loss of £13 million (roughly Cdn$22 million). While not a good result, the number does show the company is moving in the right direction and is growth compared to the £25 million (Cdn$42 million) loss in the second half of 2017.
Still, year-on-year the performance is a drastic drop. During the first half of 2017, Aviva Canada recorded an operating profit of £71 million (Cdn$120.4 million). While analysts may be wondering what so wrong in the space of a year, Aviva is clearly putting the blame on the Ontario auto insurance situation.
While Aviva Canada may reduce its overall presence in Ontario, Holmes says the company will remain in the province and is working with the government to bring reforms to car insurance.
“The one thing that’s clear in Canada is that the nature of regulation at the moment does not serve the customer well. We need regulation to work in the interests of the customer; they [regulators] should promote product innovation and they should ensure the maximum amount of competition in the market. I think all of us agree that constantly increasing rates is not a long-term solution.”
“I’m optimistic about what the government is saying about the need for reform, what the regulator is saying about the need for reform, and we have the Marshall report, based on which the government made some very specific changes that all were aimed at driving down the cost of insurance.”