By: Luke Jones, Published on March 30, 2018 08:56 AM, Last Update on March 30, 2018 05:57 AM
Intact Insurance, the largest property and casualty provider in Canada, has spoken this year about the challenges in the auto insurance market. Indeed, the company has said it will be forced to increase auto premiums this year. Now, Intact says it is even prepared to lose market share in the auto insurance sector to improve its situation.
“We have been and continue to be prepared to lose market share in order to fix our short-term challenges,” Darren Godfrey, senior vice president of personal lines for Intact Insurance, said Tuesday during a presentation at Intact’s investor day. “We are losing (market share) in terms of non-renewing, where customers are cancelling their renewal book.”
Intact Insurance is Canada’s leading auto coverage provider. While it wiould take a hit on market share, it is unlikely to lose it number one position, simply because other insurers are in a similar situation. Aviva Canada, the nation’s second-largest P&C has also said it premiums will be increased, while RSA Canada has said the same.
As for Intact, the company has already been approved for auto insurance rate hikes in Alberta, Atlantic Canada, and Ontario.
Godfrey’s comments concerned Intact’s rate increases in personal auto insurance. Intact expected a 5% rate increase Canada-wide in auto this year. So far, chief strategy officer Monika Federau says the company is “not seeing a deterioration in the brand.”
Last month, the company said the main factors in underperforming auto numbers are new technology and expensive parts that are raising the cost of collision repairs. Intact Insurance recorded a combined ratio of 101.2% in personal auto for the quarter ending Dec. 31, 2017. The ratio was up 0.3 points from 100.9% during the same frame (Q4) in 2016.
“Physical damage inflation remains the main driver of our current under-performance [in the most recent quarter], but severe weather was also a factor,” Intact Financial Corporation CEO Charles Brindamour said in a conference call with investors on February 7. This was “largely driven by costs of repairs, largely driven by technology,” he said. “Parts are more costly, [and] the repairs are more complex and take more time.”