A difficult situation in auto insurance and a hardening of home insurance and commercial markets has left insurance companies facing tough decisions. In Ontario, rising auto claims and repair costs have led industry leaders to raise rates and spread focus. Last week, Intact Financial Corporation insisted it will not trade growth for lower rates heading into 2019.
“We’re not chasing growth by lowering rates as we move into 2019,” Darren Godfrey, Intact’s senior vice president of personal lines, confirmed during the company’s Q3 2018 earning call last Wednesday.
Godfrey said Intact will instead adopt an approach that is “very segmented, very cautious, very prudent. But we do expect there will continue to be some short-term pressure.”
By using this model, the company aims to see “growth opportunities arising for us. We do expect that the industry will catch up with rate adequacy as the conditions continue to firm.”
Personal auto continues to be a problem with an industry-wide combined ratio of over 100%. Godfrey says the is obvious inadequacy and future rate increases are a certainty. Intact will also observe how marijuana legalization affects auto insurance lines over the coming year.
“We will be very prudent in terms of how we reflect the possible impact of cannabis both in terms of our perspective view on automobile, but also in terms of subsequent rate increases that we’ll be looking to gain pretty much coast-to-coast,” he said.
During its third quarter (2018), Intact saw its auto premiums fall 2% year-on-year but the company’s combined ratio improved 6.1 points to 99%.