Canada saw above-average catastrophe losses last year due to record wildfires and other natural disasters but pulling back from catastrophe-exposed areas “isn’t the right solution” for Aviva.
However, Aviva Canada CEO Tracy Garrad (pictured) said the insurer would also need to take a “different approach” to address losses.
“Ultimately, as an insurer, we’re here to protect customers when they need it most,” Garrad told Insurance Business after Aviva announced its full-year 2023 financial results.
“So, pulling back is not necessarily the right solution for us and is definitely not what consumers, regulators, or governments want us to do.
“But of course, what we do need to do is to take steps to adequately identify the risk, to price the risk appropriately, and then to administer and fulfil efficiently the policies and the coverage that we put in place.
“I won’t rule out [a pull-back] in areas that become very prone to repeated exposure and that there may be some points at which we do need to take a different approach.”
The chief executive also acknowledged continued challenges in personal lines, particularly in auto insurance, saying that additional rate measures would be needed this year.
“Getting rate through the book with a return to pre-COVID frequency, which has crept up on all of us, is quite difficult in a regulatory context, especially in Alberta, but difficult everywhere,” Garrad said.
“We’re happy with the actions that we have taken so far and will continue to take over the remainder of this year to be where we need to be.”
Garrad said she expects the full benefit of actions being taken in personal lines to play out between 12 to 18 months.
Aside from inflation and claims costs, she also cited growing levels of auto theft as a driver for auto insurance rate rises. To aid government and industry efforts, Aviva Canada will continue to take a “leading role” in efforts to combat auto theft and fraud.
Garrad said: “We are playing a key role in terms of raising the issues around auto theft and significantly participating with Equite and the IBC. We also took quite a leading role at the recent [auto theft] summit and plan to do so in any task force that is formed to ensure that we tackle auto theft and fraud.”
Aviva Canada reported that its undiscounted combined operating ratio (COR) increased to 95.3% from 93.7% in 2022. However, its general business experienced 10% growth in premiums due to a combination of rate and new business growth.
Garrad, who replaced Jason Storah as chief executive in October last year, noted Aviva Canada’s commercial lines business as a strong performer and one of its priority areas.
“It’s an area that we want to double down on as part of the forward strategy,” she said. “We’re very happy with the combination of new business and rate growth that we’re seeing.”
Despite the insurer’s strong performance, Garrad remained cognizant of Canada-specific headwinds.
“Wildfires and the potential volatility around catastrophe events do concern me most,” she said. “We are doing our utmost to understand the risk, understand our exposure, price for it appropriately, and manage the supply chain.
“Then, of course, there’s always new regulation coming into force. We have new regulations coming in around complaints handling. I sat on the board of a financial services regulator for five years, so I think, in general, regulation comes from a place of good intent.
“But we do have to think about the burden that it brings to organizations such as ours and the ways in which we can meet all those obligations without making journeys cumbersome for customers. I don’t think that, at the end of the day, that’s what the regulator wants to achieve. So, we must be thoughtful about how we approach and implement those regulations.”
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