What's happening with premium rates in Canada?

Trends in both personal lines and commercial lines revealed

What's happening with premium rates in Canada?

Insurance News

By Mika Pangilinan

Applied Systems has unveiled the latest results of its flagship indices, revealing premium rate trends in the Canadian insurance industry for the second quarter of 2023.

In its Applied Rating Index, which measures premium rate changes in personal auto and personal property, the insurance technology provider recorded average increases across both segments.   

“Both personal auto and personal property markets are demonstrating year-over-year and quarter-over-quarter premium rate change increases,” said Steve Whitelaw, senior vice president and general manager.

Personal auto had a 5.9% year-over-year increase in premium rate change. Compared to the same quarter last year, this increase was seen across all provinces, with notable variations in Alberta (6.5%), Ontario (4%), Quebec (9.8%), and the Atlantic provinces (6.9%),

Additionally, premium rate change in the segment increased 1.7% from Q1 2023. The upward trend was similarly observed in all provinces, with Alberta (1.1%), Ontario (1.5%), Quebec (1.4%), and the Atlantic provinces (1.2%) seeing modest increases.

Personal property followed a similar pattern of growth, with premium rate change increasing 5.9% annually and 2.5% on a quarterly basis.   

Quebec was an outlier in the personal property segment, having seen a decrease of -0.4% compared to the previous year. Meanwhile, Alberta, British Columbia, Ontario, the Atlantic provinces, and Saskatchewan & Manitoba observed increases of 7.1%, 9%, 6.4%, 8.6%, and 6.2%, respectively.

As for quarter-over-quarter changes, Quebec exhibited a modest decrease of -0.1%, while the other provinces saw increases ranging from 1.3% to 4.3%.

Commercial lines see mixed trends

In a separate release, Applied Systems disclosed the findings of its commercial index, revealing a 7.44% increase in overall premium rates.

Although the quarter marked a growth in rates, it was comparatively lower than the 8.95% rate increase observed in the same period of the previous year.

Business & professional services, construction, retail services, and real estate services all saw declines in premium rates compared to the same quarter of the previous year. Conversely, hospitality services observed increases when compared to Q2 2022.

Furthermore, average renewal rate changes increased quarter over quarter for nearly all of the most commonly placed segments, including real estate (6.87% from 6.83%), business & professional services (7.42% from 6.99%), and hospitality services (9.28% from 8.9%). However, quarterly decreases were recorded in construction (7.24% from 7.42%) and retail services (8.31% from 8.87%).

“We are seeing greater variability in average renewal rate change both year over year and quarter over quarter,” said Whitelaw. “As we make our way into the second half of the year, the index will continue to provide evidence of how macroeconomic trends are affecting the market, allowing the industry to stay up to date on the latest trends to inform renewal conversations, forecasting and more.”

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