Intact CEO Charles Brindamour has labelled Alberta’s rate freeze a political decision that could lead to a capacity squeeze within six months, with the insurer prepared to reduce its appetite in the province if profitability is under threat.
“Alberta, it’s political, it’s a real bad call,” Brindamour told analysts and investors on a Wednesday earnings call.
“I think within six months you’ll have capacity issues in that market, and I think other provinces understand that when you artificially try to do stuff like that, there’s a blowback that comes back and that might very well be the case in Alberta.”
While it has been proactive on rates and sees itself as being in a strong position, Intact could take action on its appetite and around marketing in the province should profitability be threatened in the face of inflation, the insurer’s leadership team revealed.
“The new policy of a rate freeze is ill-advised in our view and will do nothing really to address the core issues that are putting pressure on rates for Albertans,” Intact EVP and COO Patrick Barbeau said.
“If anything, it may cause significant harm as the industry will be temporarily left behind on reflecting inflation in the rate.”
Intact is prepared to engage with the government on alternative solutions, Barbeau committed.
“We need to be clear, we’ll take the necessary actions to protect the profitability position in the province, and that might include the appetite regarding new business and our renewals, and at a minimum the amount of future marketing investments,” Barbeau said.
The Intact leaders’ comments came after the insurer unveiled its full year and Q4 results, reporting net income of $2.4 billion for the year.
In January, insurer and broker representatives reacted with consternation and criticism to the Alberta government’s planned private vehicle auto insurance rate freeze, set to run for the remainder of 2023.
Both the Insurance Bureau of Canada and the Insurance Brokers Association of Alberta have warned of unintended and negative “consequences” from the move.
