Property overtaking auto in market share

PROPERTY insurance is becoming a more important line of business for Canadian insurers as auto insurance slowly changes, the president and ceo of MSA Research says.

Joel Baker told delegates at the Canadian Insurance Financial Forum in Niagara-on-the-Lake, Ont. that in 1999 auto insurance represented 50% of direct premiums written and property was 31%, excluding government insurers.

Nearly 20 years later, auto accounts for 42% and property 39%. “That is an eight-point shift between property and auto and we expect that trend to continue,” Mr. Baker said. “We always talk about auto as half of the industry, and half of auto is Ontario auto, and as Ontario auto goes so goes the industry, but we can’t say that anymore — property is probably going to surpass auto.”

Even within Ontario auto private passenger lines, physical damage is not the stable line it used to be, he added.

“Physical damage has always behaved well in the past and been a stable, boring sub-line of auto but that is no longer the case,” Mr. Baker said.

“(Physical damage) losses are at an all-time high now.”

He said MSA Research has received preliminary 2018 first quarter data from a few big insurers that shows loss ratios over 100% in that product line.

“That is a confluence of weather, distracted driving and expense of repairing vehicles . . . and we don’t know when or how it will stop,” Mr. Baker said.

The emergence of overland water and cyber insurance will present new avenues for growth for the insurance industry, although underwriting cyber can be a bit risky, he added. “Cyber liability . . . is currently very small, $101m in direct written premium in 2017 . . . but this growth is pretty rapid and we expect that to continue growing. “But that may not grow fast enough to compensate for the loss of auto lines as autonomous vehicles come on board,” he said.

“Cyber is growing faster than property and auto and it’s very rare to have a line of business crop out of nowhere,” Mr. Baker said. “It’s a great thing, potentially, but it’s also a very volatile line.”

(More coverage of the Canadian Insurance Financial Forum in the May 21 weekly edition of Thompson’s. To subscribe, please choose the ‘Subscribe’ tab on our main page or email for more info).