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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 23, 2024 08:22 AM (EDT)
Despite a manageable level of catastrophe activity during the first half of 2024, Canada’s property/casualty (P/C) insurers faced four major events in this year’s third quarter which should lead to another record year for losses, according to a new AM Best report.
Losses due to catastrophe events in 2023 are estimated to have reached CAD 3.1 billion, making it one of the five worst catastrophe years on record, trailing only inflation-adjusted catastrophe losses in 2013 and 2016. The Best’s Market Segment Report also notes that AM Best is maintaining a stable outlook on Canada’s P/C industry. Chief among the factors cited are solid risk-adjusted capitalization levels, supported by very strong operating results, favorable combined ratios and growth in insurance service revenue, and improving investment returns.
“Canada’s P/C insurance industry managed to achieve favorable financial results, with net income up an astounding 77.5%, from CAD 4.0 billion in 2022 to CAD 7.1 billion in 2023,” said Rosemarie Mirabella, director, AM Best. “Profitability was driven by growth in underwriting income and a resurgence in investment income, partly counterbalanced by rising finance expenses from insurance contracts, as well as general and operating expenses.”
However, Canada’s P/C segment will continue to face challenges from growing frequency and severity of extreme catastrophe weather events, continued increases in reinsurance coverage costs and ongoing pressure in the personal auto lines business.
Canada’s P/C reinsurance industry plays a pivotal role in providing financial stability to primary insurers given the increase in weather-related events affecting the country. The market consists of domestic reinsurers that are part of large international players. Earlier this year, AM Best upgraded its market segment outlook for the global non-life reinsurance industry to positive from stable. This upgrade reflected the industry’s strong profit margins, higher attachment points, and tighter terms and conditions following a period of significant repricing.
“Canada’s P/C market made extensive changes in the terms, conditions, and structures of reinsurance programs during the 2023 reinsurance renewal season, leading to significant premium increases for primary insurers,” Mirabella said. “The unprecedented wildfire season throughout the year and the increase in flooding events, concentrated regional carriers have been disproportionately impacted by additional reinsurance rate increases.”
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347964 .
To view a video on this report with Rosemarie Mirabella, please visit http://www.ambest.com/v.asp?v=ambcanadapc1024&AltSrc=182 .
AM Best will host an insurance market briefing on the state of Canada’s insurance industry in Toronto on Friday, Oct. 25, 2024. During the half-day event, AM Best analysts will deliver market insights and present overviews of Canada’s main insurance sectors. For more information, please visit the event website.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.