By: Luke Jones, Published on June 27, 2017 02:55 PM, Last Update on June 27, 2017 11:57 AM
A report from MSA Research Inc. shows that the Canadian property and casualty (P&C) industry made virtually no underwriting income during the first quarter of 2017. However, through the first three months of the year, net investment did increase to over double the amount of a year ago.
The report points to severe weather events and an increasingly volatile auto insurance market for reasons why no income was made in underwriting:
“Marred by lousy weather, challenging auto environments in most of the country, and mixed commercial results, industry results were substantially deflated for the first quarter of 2017,” wrote Joel Baker, chief executive officer of Toronto-based MSA, said. He was speaking in the company’s most recent Quarterly Outlook Report, released Monday to Canadian Underwriter.
During Q1, the P&C industry in Canada has an underwriting loss of $3.748 million, down from an income of $616.8 million year-on-year. The report does not take into account crown corporation providers who operate in public auto insurance I British Columbia, Manitoba and Saskatchewan.
The Quarterly Outlook Report is available for purchase from MSA’s website.
Despite an income drop, net investment increased to $987 million, a significant 101% rise from 490 million during the same period in 2016.
“Thanks to current regulations, the industry is well-capitalized to cover a large earthquake – up to a point,” IBC CEO Don Forgeron wrote in MSA’s quarterly outlook report for Q1 2017. “To its credit, the Office of the Superintendent of Financial Institutions (OSFI) has established a best-in-class regulatory regime in which insurers are required to have enough resources to cover a 1-in-500-year event (an estimated $35 billion in damage).”
But Forgeron added “there is no guarantee that a large earthquake will not exceed currently-assumed damage figures.”