Alberta flooding hits Aviva underwriting hard
Aviva PLC released its financial results for 2013, reporting a 2.2-point increase in its claims ratio in Canada, a 6 per cent increase in its worldwide operating profit and a 108 per cent increase in its commercial underwriting result in Canada due in part to the use of predictive analytics.
London, England-based Aviva reported its claims ratio in Canada was 63.2 per cent in 2013, up from 61 per cent in 2012. The insurance carrier attributed the change in part to floods in Alberta last June, and in Toronto after the July 8 rainstorm.
The Alberta floods, which Aviva described as a one-in-100 year event, affected the result of the entire group by $135.5 million, net of reinsurance.
"At the start of July 2013, there was also flooding in Toronto which has further impacted the FY13 group result by $72.6 million (net of reinsurance)," Aviva stated in its filing with the United States Securities and Exchange Commission. "Of the total impact of these two floods, $100 million is included in the results for Canada and $108 million is in the results of our internal reinsurance company, Aviva Re.”
Last year’s floods in Alberta and the Toronto area also had a 1.6-point negative impact on the group's combined operating ratio, which was 97.3 per cent in 2013 and 97.0 per cent in 2012.
In Canada, Aviva's combined operating ratio was 94.6 per cent in 2013, up 1.2 points from 93.4 per cent in 2012.
The claims ratio in Canada increased 2.2 points, from 61 per cent in 2012 to 63.2 per cent in 2013. In personal lines, the claims ratio increased 3.6 points, from 60.6 per cent in 2012 to 64.0 per cent in 2013.
Ontario to reform joint and several liability
Insurance premiums for Ontario municipalities have climbed by $35 million since 2010, and members of provincial parliament from all three parties recently spoke in favour of a motion to reform the province's law on joint and several liability.
The Ontario Legislature called on the government to implement a "comprehensive, long-term solution to reform joint and several liability insurance for municipalities by no later than June 2014." (continued.)
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The motion was tabled by Randy Pettapiece, the Progressive Conservative party's rural affairs critic and MPP for Perth-Wellington.
“Under the Negligence Act, damages can be recovered from any defendant, even if they are found to be only 1 per cent at fault,” says Randy Pettapiece, the Progressive Conservative party’s rural affairs critic and MPP for Perth Wellington. “Municipalities often targeted as insurers of last resort can be on the hook for massive damage awards.”
Because of this law, insurance premiums for municipalities have increased by $35 million in the last four years, suggested Julia Munro, PC MPP for York Simcoe.
“Medium-sized municipalities, similar to the town of East Gwillimbury in my riding, with a population of 24,000 people, have seen an average increase of 35 per cent in liability insurance premiums,” says Munro. “We know that people in some communities spend more on insurance than they do for their library. In another county, for every $2 spent on snowplowing, another $1 is spent on insurance.”
Regulatory fragmentation discouraging insurers from investing
Policymakers needs to create a ‘global infrastructure asset class’ in order to encourage insurance carriers and other institutional investors to put their money in long-term infrastructure loans — including transport, utilities, health care and education — suggests a recent report from Swiss Reinsurance Company Ltd. and the Institute of International Finance (IIF).
The recovery from the financial crisis from 2008 “has been weak,” with unemployment “stubbornly high,” the report suggests.
“This environment is not supportive of institutional investors' appetite to make long-term commitments,” states the report. “Many institutional investors have sought refuge in 'safe assets' since the onset of the financial crisis, and thus have the potential to increase their holdings of long-term assets.”
Zurich-based Swiss Re and IIF jointly released a report, titled ‘Infrastructure Investing. It Matters,’ which includes a wish list of policy decisions that would support investment in long-term infrastructure. The Institute of International Finance (IIF) is a global association of more than 475 financial institutions.
IIF and Swiss Re include recommendations to “strengthen the role of institutional investors and facilitate infrastructure investing.” (continued.)
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By long-term infrastructure, Swiss Re and IIF are referring to investments in non-residential assets with a life of 25 to 60 years, such as transport, communication, utilities, manufacturing, retail, health and education.
Sprint partners with IMS UBI Intelligence
U.S. telecom giant Sprint announced that a usage-based insurance offering through IMS UBI Intelligence, is now available through its insurance solutions portfolio for auto insurance customers.
The offering is provided by Intelligent Mechatronic Systems (IMS), a Waterloo, Ont.-based company that provides ‘DriveSync,’ a ‘connected car’ platform that includes telematics services.
Sprint launched its Integrated Insurance Solutions business in 2012. Its portfolio also includes a text disablement product.
Policyholders who use the program from Sprint through their insurers have data transmitted over the Sprint wireless network to a cloud-based system that analyzes the information with driver-scoring software.
“Our auto insurance carriers have been requesting a single source for all their UBI (usage-based insurance) needs,” says Mohamed Nasser, director of M2M Product and Marketing at Sprint. “We have selected IMS because they provide the most complete, turnkey solution available on the market today, including hardware, logistics, support, secure data warehousing and analytics.”
