A class action lawsuit filed on behalf of homeowners affected by the Quebec ice storm of 1998 has been tentatively settled – just as an A.M Best special report predicts a challenging 2013 for P&C insurers.
The consumer association Option consommateurs obtained a total settlement of $52.5 million in the class action suit, which will compensate approximately two million Quebecers who were left without power during the winter of 1998, when the most densely populated sections of that province were hit by an ice storm.
“This is one of the most significant indemnity obtained in a class action in Quebec,” Jean-Pierre Fafard, of the firm Sylvestre Fafard Painchaud, told InsuranceBusiness.ca. “We are happy with the settlement.”
The Quebec agreement reached on September 3 with 15 insurance companies provides for the payment of a sum of $40 million, without admission of liability. This is in addition to the $12.5 million already obtained in an agreement reached with four insurance companies on December 18 of last year.
This agreement must be approved by the Superior Court of Quebec at a hearing to be held in Montreal on October 25. (continued.)
#pb#
“We expect this to be approved,” says Fafard. “The settlement provides the same indemnity to all those in the class action suit, as it was difficult to prove if who went without electricity for two hours or two days or two weeks.”
According to A.M. Best’s special report on the Canadian market, P&C insurers’ operating and underwriting performance was strong in 2012, but results for this year will be impacted by the catastrophic losses and changing regulatory environment.
The report showed that 2012 was the fourth consecutive year that the combined ratio improved (from 99.1 in 2011 to 96.2 in 2012) and net premiums written (NPW) increased (from $36.4 billion in 2011 to $37.8 billion in 2012), as net premiums earned also increased 4.3 per cent to $37.3 billion from $35.7 billion in 2011.
In the property segment, 2012 saw fewer weather-related events and catastrophes than 2011.
In the wake of major 2011 losses, companies increased rates on both commercial and personal property lines. A.M. Best states that both lines achieved growth in premium, generally derived from these significant rate hikes. Commercial property NPW grew by 7.8 per cent in 2012 and 16.5 per cent over five years.
Though property results were relatively stable in 2012, this year’s results will not be as favourable for insurers. (continued.)
#pb#
The June flooding in Alberta is estimated to cost insurers anywhere from $1 billion to $3.75 billion, says A.M Best.
“This catastrophe alone has the potential to cause one of the largest insured losses in Canada, likely driven primarily from commercial lines,” states the report. “Commercial insurers may face business-interruption claims from enterprises that carry this coverage.”
In July – like their western counterparts – many areas of Toronto were also flooded when the city was hit with approximately 10 centimetres of rain in less than two hours.
“Catastrophes such as these, along with a series of smaller weather-related events, have presented the P/C industry, as well as federal and provincial regulators, with many unknowns as they assess damage and respond to claims,” states the report. “It is uncertain whether or not certain provinces such as Alberta will face a property insurance availability issue; rate increases will cover underwriting risk; the industry will insist on infrastructure improvements; policy wording will be re-examined; and P/C insurers will scrutinize flood maps and geocoding of property locations for potential underwriting risk.”
Due to an increased frequency and severity of catastrophes, A.M. Best anticipates an increase in the property loss ratio over 2012 as well as elevated growth in net loss reserves. (continued.)
#pb#
Following the Quebec ice storm of 1998, Option consommateurs filed a class action against 19 home insurance companies. The association maintains that the policyholders were entitled to compensation as “additional living expenses” as their homes were uninhabitable under the terms of their insurance contracts.
This agreement was reached on behalf of those persons who had a home insurance policy with one of the 15 named insurance companies during the ice storm of January 1998 and who lived in one of the 640 municipalities targeted by the class action.
Those companies involved are:
Allstate Insurance Company of Canada
Aviva Insurance Company of Canada*
Desjardins General Insurance Inc.
The Wawanesa Mutual Insurance Company
Industrial Alliance Auto and Home Insurance Inc.
La Capitale General Insurance Inc.
Liberty Mutual Insurance Company
Traders General Insurance Company
L’Unique General Insurance Inc.
The Missisquoi Insurance Company
Optimum Insurance Company Inc.
Promutuel Vercheres Societe Mutuelle d’assurance Generale
SSQ Societe d’assurances Generales Inc.
The Canadian Union Insurance Company
The Personal General Insurance Inc.
*Formerly General Accident Assurance Company
