Facts of the Property and Casualty Insurance Industry in Canada 2016

Transcription

1 Facts of the Property and Casualty Insurance Industry in Canada 2016

2 Facts of the Property and Casualty Insurance Industry in Canada 2016 is published by Insurance Bureau of Canada (IBC). IBC is the trade association representing Canada s private property and casualty (P&C) insurance companies. Since 1972, IBC has published Facts to provide a snapshot of the state of the P&C insurance industry. The data in Facts 2016 come from several national and international sources, including IBC. Data are from 2014, 2015 or 2016, depending on when sources released their information. In some instances, figures may not add up to 100% as a result of rounding. Also, because sources collect data in different ways, there can be small differences among similar data. 38th edition, 2016 ISSN Insurance Bureau of Canada. All rights reserved.

3 President s message The time has come to get serious about addressing climate change in Canada. And IBC is ready. For more than a decade, IBC has been reporting on a rise in claims as a result of increases in severe weather events related to climate change. We shared these alarming figures with consumers and knocked on the doors of provincial and federal governments to alert politicians of the costs their constituents are facing. We urged government officials to create a robust culture of resilience. While our reports garnered accolades from climate change experts, governments were focused on other priorities. Then in May 2015, Albertans elected a new government on a platform that included flood mitigation efforts. A few months later, Canadians elected a new government in Ottawa that pledged $5.6 billion over the next four years in green infrastructure, including flood mitigation systems. IBC has developed a Natural Catastrophe Strategy for Canada that encourages the industry and federal government to collaborate on two risks flood and earthquake. We re in discussions with the federal government on a collaborative national flood program. And by hosting two earthquake symposiums one in British Columbia in 2014 and another in Quebec in 2015 we ve laid the groundwork for earthquake preparedness. While IBC s climate change efforts advance, some of our auto insurance files remain a challenge. We have made progress on the Ontario Auto insurance file, but consumers in the province are still paying too much for car insurance. Also in need of reform is auto insurance in Alberta. The industry is working with both provincial governments on reforms to save drivers money. In addition, we are monitoring automobile innovations and their effect on insurance. There are certainly challenges ahead, but I remain optimistic. Canada s P&C insurance industry is healthy and strong. Our industry is striving to meet these new challenges with innovative new products for our customers changing needs. These are exciting times! Don Forgeron President and CEO, Insurance Bureau of Canada IBC Facts

4 Contents Section one 3 24 Section two Canada s Section three Insurance Canada s P&C insurance industry, all sectors 4 Industry at a glance - updated to Premiums - updated to Insurance dollar - updated to Claims - updated to Taxes and levies 12 Operating expenses - updated to Profit - updated to Catastrophic losses - updated to Regulation and regulatory issues P&C insurance industry by line of business Auto insurance 26 Mandatory insurance 26 Optional insurance 27 No-fault insurance 28 What s mandatory where 40 Premiums and claims 41 Average losses 42 Major issues Home insurance 44 Types of coverage 45 Premiums and claims 45 Major issues Business insurance 47 Types of coverage 48 Premiums and claims 48 Major issues organizations 50 IBC members 55 IBC offices 56 IBC services 57 Superintendents of insurance 59 Insurance-related organizations 2 IBC Facts 2016

5 Canada s P&C insurance industry, all sectors 4 Industry at a glance - updated to Premiums - updated to Insurance dollar - updated to Claims - updated to Taxes and levies 12 Operating expenses - updated to Profit - updated to Catastrophic losses - updated to Regulation and regulatory issues 1 IBC Facts

6 Industry at a glance 42.2% of direct written premiums were for car insurance in 2015 Of its $161.7 billion in total assets, the P&C insurance industry had $114.6 billion in invested assets in 2015 In 2015, Canadian insurers wrote $51.9 billion in direct written premiums for insurance on consumers homes, cars and businesses $8.2 billion the amount the P&C insurance industry contributed in taxes and levies to federal and provincial governments in 2014 Property claims as a percentage of total claims have risen significantly over the last decade 24.4% 30.9% The P&C insurance industry employed 122,500 people across Canada in 2015

7 More than 207 private P&C insurers actively compete in Canada More than half of every dollar of revenue received by insurers is paid out in claims 51.1% - claims paid out to policyholders 20.7% - operating expenses including employee compensation 16.0% - taxes and levies 8.2% - profit margin IBC Facts

8 Premiums Insurance premiums are determined based on risk. Insurers consider the likelihood of a customer (or a group of customers with the same set of circumstances) making a claim, and how much those claims will likely cost. The price for premiums is based, in part, on an insurer s best estimate of the amount it will be required to pay out in claims on the policies it wrote in any given year. Insurers pool the premiums of their many policyholders to cover the losses claimed by the few in that year. Along with covering claim costs, premiums are calculated to cover taxes, operating expenses and expected profits. The requirement to estimate future costs is a unique challenge in the insurance business. Most businesses can calculate the actual costs of producing and selling a product before the selling price is determined. However, when setting premiums, P&C insurance companies can only estimate the costs of the medical treatments, car repairs or house repairs they will have to pay in the future. Consumers often find this confusing and are unsure about what a premium represents. Many think of their premiums as a bank account it is there just for them in case of a loss. But that s not how it works. Insurance companies report premiums in two ways. Direct written premiums are the total amount of premiums that a P&C insurance company receives in one year. Net written premiums are direct written premium amounts plus reinsurance written premium amounts minus reinsurance ceded premium amounts. There are more than 207 private P&C insurers actively competing in Canada to sell insurance policies on homes, cars and businesses. In 2015, private Canadian insurers wrote $51.9 billion in direct written premiums ($47 billion in net written premiums) for insurance on consumers homes, cars and businesses. Top 20 private P&C insurers by direct written premiums, 2015 Rank Company % 1 Intact Group Aviva Group Desjardins Group TD Insurance Group RSA Group Wawanesa Mutual Insurance Company Lloyd's Underwriters Co-operators Group Economical Group Travelers Group Allstate Group Northbridge Group AIG Insurance Company of Canada Chubb Group RBC Group Zurich Insurance Company Ltd La Capitale Group Genworth Financial Mortgage Insurance Guarantee Company of North America Green Shield Canada 0.89 Sources: IBC, MSA 6 IBC Facts 2016

9 Of the $47 billion in net written premiums, 43.9% was for one line of business: automobile, including commercial vehicle insurance. (Figures do not include government-owned auto insurers in British Columbia, Saskatchewan, Manitoba and Quebec, which exclusively provide the compulsory component of auto insurance in those provinces.) Personal property, commercial property and liability made up most of the rest. Specialized lines of insurance, such as boiler and machinery, marine and aircraft, and surety and fidelity, make up about 7% of the business. The smallest portion of the business is accident and sickness insurance, which a few P&C insurance companies sell. Most of this type of insurance is sold by life and health insurers. Net written premiums (NWP) in $000,000, 1992 to 2015 Personal property NWP Commercial property NWP Liability NWP Other NWP Total NWP Auto NWP ,763 2,642 1,866 1, , ,158 2,803 2,062 1, , ,697 3,042 2,337 1, , ,403 3,163 2,553 1,694 1,258 18, ,597 3,246 2,658 1,867 1,202 18, ,553 3,281 2,711 1,878 1,185 18, ,686 3,383 2,469 1,823 1,198 18, ,839 3,293 2,434 1,846 1,315 18, ,705 3,429 2,591 1,982 1,471 20, ,281 3,481 2,768 2,194 1,519 21, ,150 3,971 3,909 3,145 3,333 27, ,781 4,452 4,518 4,081 2,581 31, ,415 5,079 4,802 4,357 2,622 33, ,430 5,315 4,820 4,600 2,698 33, ,590 5,621 4,985 4,826 2,943 34, ,758 6,033 4,997 4,766 3,540 36, ,140 6,495 5,001 4,624 3,438 36, ,126 7,013 5,313 4,667 3,068 38, ,977 7,598 5,568 4,726 3,416 40, ,239 8,192 6,014 4,817 3,533 42, ,690 8,565 6,136 4,502 3,758 43, ,089 9,024 6,339 4,731 3,823 45, ,295 9,791 6,621 4,781 4,143 46, ,630 10,187 6,656 4,988 4,547 47,009 Sources: IBC, MSA, SCOR, AMF Direct written premiums (DWP) by line, 2015 Line of business DWP in $000,000 DWP as % of total business Total auto 21, Auto - private passenger 18, Personal property 11, Commercial property 7, Liability 5, Specialized 4, Accident and sickness 1, Total business 51, Sources: IBC, MSA, SCOR, AMF Net written premiums (NWP) by line, 2015 Line of business NWP in $000,000 NWP as % of total business Total auto 20, Auto - private passenger 16, Personal property 10, Commercial property 6, Liability 4, Specialized 3, Accident and sickness Total business 47, Sources: IBC, MSA, SCOR, AMF IBC Facts

10 Insurance dollar The Insurance Dollar graphic shows how insurers spent each dollar of revenue averaged over seven years, from 2009 to More than half of every dollar received is paid out in claims Sources: IBC, MSA 51.1% - claims paid out to policyholders 20.7% - operating expenses including employee compensation 16.0% - taxes and levies 8.2% - profit margin 8 IBC Facts 2016

11 Claims In 2015, Canadian P&C insurers paid out $30.3 billion, or 61%, of insurance company revenues in claims. A note about terminology in the chart below: Net claims incurred are the total claims cost incurred in the period less any share to be paid by reinsurers. Net claims incurred (NCI) in $000,000, 1992 to 2015 Auto NCI Personal property NCI Commercial property NCI Liability NCI Other NCI Total NCI ,074 1,907 1,532 1, , ,420 1,974 1,430 1, , ,892 1,955 1,493 1, , ,342 2,003 1,504 1, , ,034 2,301 1,665 1, , ,221 2,112 1,838 1, , ,185 2,523 2,089 1, , ,475 2,152 1,758 1, , ,443 2,286 1,847 1, , ,431 2,316 2,031 1, , ,844 2,352 2,195 2,085 2,019 19, ,028 2,574 2,161 2, , ,081 2,921 2,033 3, , ,626 3,570 3,356 3, , ,968 3,556 2,173 2,577 1,052 20, ,753 3,842 2,589 2, , ,997 4,720 3,157 2,726 1,404 25, ,472 5,071 3,454 2,878 1,464 26, ,205 4,566 3,276 2,766 1,475 27, ,607 5,336 4,087 2,977 1,560 28, ,731 5,013 3,981 2,615 1,479 27, ,125 6,161 4,699 2,486 1,650 30, ,835 6,045 3,955 2,526 1,970 30, ,277 5,489 3,797 3,106 1,761 29,431 Net claims incurred (NCI) by line, 2015 Line of business NCI in $000,000 NCI as % of total business Total auto 15, Auto - private passenger 12, Personal property 5, Commercial property 3, Liability 3, Specialized 1, Accident and sickness Total business 29, Sources: IBC, MSA, SCOR, AMF Sources: IBC, MSA, SCOR, AMF IBC Facts

12 Taxes and levies Each year, the P&C insurance industry makes significant tax contributions to government tax revenues. In 2014, Canadian P&C insurers paid taxes and levies totalling over $8.2 billion to federal and provincial governments. About 83% ($6.8 billion) of the industry s total tax contribution was incurred through the insurance supply chain and was paid regardless of the industry s bottom line, while only 17% ($1.4 billion) was paid in income taxes. The main taxes and levies applied to the P&C insurance industry are: Retail sales tax on claims and expenses. The P&C insurance industry paid more than $1.78 billion in goods and services tax/harmonized sales tax (GST/HST) and provincial sales tax (PST/QST) applicable to P&C insurance claims. An additional $337 million in sales taxes related to general and administrative expenses was incurred as part of daily operations. Being a GST/HST exempt industry means these costs are unrecoverable through input tax credits. Insurance premium tax. Provinces apply this tax, which is included in premiums, at different rates on different insurance products. Some jurisdictions have combined this tax with a fire tax. The fire tax is collected by some provincial governments to be disbursed to municipalities to support fire services. PST/QST on premiums. This is a provincial sales tax collected from policyholders in Manitoba, Ontario and Quebec. Health care levy. This levy is paid to most provincial governments to support the health care system, particularly to pay the public health system costs for victims of automobile collisions. Health care levies are included in the industry s total tax contribution because they are a mandatory payment. Excluding income taxes and the portion of payroll taxes remitted to governments on behalf of employees, the remaining taxes and levies accounted for over $5.7 billion or 70% of the total tax contribution. The impact of these taxes on premiums varies depending on the insurance product. On a Canadawide basis, these taxes account for 15.1% of the premium for personal property insurance, 11.2% of the premium for private passenger auto insurance (includes health care levies), 11.0% of the premium for commercial liability insurance and 9.9% of the premium for commercial property insurance. Federal and provincial taxes and levies payable in $000,000, 2014 Income taxes 1,375.6 Payroll taxes 1,406.6 Realty and business taxes 36.1 Transaction taxes GST on claims PST/QST on claims 1,037.8 RST on operating expenses PST on premiums (Man., Ont., Que.) 1,400.6 Insurance premium taxes 1,580.0 Transaction subtotal 5,100.8 Total taxes 7,919.0 Health levies Total 8,223.5 Recent tax changes Source: IBC On April 1, 2016, Alberta will increase its insurance premium tax rate from 3% to 4%. Canada s Department of Finance has not made many public announcements about the OECD s Base Erosion and Profit Shifting (BEPS) project to reform the international tax system, but has made it clear that Canada will be adopting all of the minimum requirements in the BEPS final report. These changes could affect Canadian insurers, particularly multinational and foreign-owned companies. 10 IBC Facts 2016

13 Provincial premium, premium sales and premium fire tax rates, 2015 Premium tax rate (%) Premium sales tax rate (%) Premium fire tax rate (%) Alberta* British Columbia (auto and property insurance) British Columbia (excluding auto and property) Manitoba New Brunswick Newfoundland and Labrador** Northwest Territories Nova Scotia Nunavut Ontario (auto insurance) Ontario (property insurance) Ontario (excluding property and auto) Prince Edward Island Quebec*** Saskatchewan (auto insurance) Saskatchewan (hail insurance) Saskatchewan (excluding auto and hail) Yukon * Alberta announced that the insurance premium tax rate will increase to 4% on April 1, ** Newfoundland and Labrador will increase the insurance premium tax rate to 5% and reintroduce a retail sales tax on premiums at 15% effective July 1, *** Insurance premium tax rates include a compensation tax that increased to 0.48% in December Source: IBC IBC Facts

14 Operating expenses Operating expenses for P&C insurers include facility costs, information technology, market research and employee compensation. Employee compensation is the largest operating expense. In 2015, the P&C insurance industry employed 122,500 people across Canada. Compensation levels in the industry are relatively high compared with most other sectors in the economy. The average weekly salary in 2015 was $1,246. This reflects the advanced skill mix that employees in the P&C insurance industry possess. Employment in the insurance industry as a whole (which includes life, health and medical, and P&C) grew by 9.3% between 2008 and 2014, according to Statistics Canada. Average weekly wage compared to benchmark industries, 2015 Mining and quarrying (except oil and gas) 1,700.1 Professional, Scientific & Tech. Services 1,335.7 Insurance Carriers & Related Activities 1,245.6 Public Administration 1,226.9 Information & Cultural Industries 1,168.6 Manufacturing 1,079.0 Hospitals 1,068.2 Credit Intermediation 1,059.2 Educational Services 1,005.5 All Industries Retail trade Accomodation & Food Service Source: Statistics Canada Table IBC Facts 2016

15 Profit Profit or return on equity in the P&C insurance industry is cyclical. It has fluctuated around an average of 10.5% since The 2015 industry return on equity was 10.0%. Return on equity comes from two revenue streams underwriting and investment earnings. In 2015, underwriting posted gains for the 12th consecutive year. The 2014 net underwriting revenue was $1.4 billion. Before 2003, underwriting posted losses for 24 years in a row. On investment, 2014 was a year of relatively low returns of 3.9%. Return on investment moves in lockstep with the yields for 3- and 5-year Government of Canada bonds, which have fallen for the last two decades. Investment income for 2014 was $4.4 billion. The P&C insurance industry is highly regulated by governments and is required by law to invest its assets prudently. More than 80% of invested assets are placed in bonds. Of its $158.5 billion in total assets, the P&C insurance industry has $114.4 billion in invested assets. This makes the Canadian P&C insurance industry a major stakeholder and investor in the national economy. P&C insurers invest mainly in domestic government and corporate bonds, and in preferred and common stocks. These investments produce a steady flow of income and balance the more variable income from the underwriting side of the business, which tends to fluctuate from year to year. Investments in $000,000 as of December 31, 2015 Bonds Shares Mortgages Real estate Term deposits Other Total 86,426 13,450 1, ,994 9, , % 11.7% 1.0% 0.1% 3.5% 8.2% 100.0% Sources: IBC, MSA, SCOR, AMF IBC Facts

16 Return on equity, return on investment and underwriting ratios, 1992 to 2015 Return on equity Return on investment Earned loss ratio Operating expense ratio Combined ratio % 10.4% 77.7% 32.9% 110.6% % 10.7% 77.1% 32.8% 109.9% % 8.0% 75.7% 31.3% 107.0% % 9.1% 73.3% 30.8% 104.1% % 10.3% 72.7% 30.7% 103.4% % 10.4% 71.4% 31.2% 102.6% % 8.5% 74.9% 32.9% 107.8% % 7.3% 72.6% 33.2% 105.9% % 9.0% 75.9% 32.7% 108.7% % 7.5% 80.0% 31.0% 111.0% % 5.4% 76.9% 28.9% 105.8% % 6.2% 69.9% 28.6% 98.4% % 5.6% 62.7% 28.2% 91.0% % 5.9% 64.7% 28.7% 93.4% % 5.9% 59.5% 28.1% 87.5% % 5.5% 62.5% 28.5% 91.0% % 3.9% 70.3% 30.0% 100.3% % 4.2% 69.5% 30.0% 99.6% % 4.3% 69.1% 30.2% 99.4% % 4.2% 68.2% 30.3% 98.4% % 3.9% 64.7% 30.6% 95.3% % 3.1% 68.1% 30.8% 98.9% % 3.9% 66.6% 31.0% 97.6% % 3.3% 63.5% 31.4% 94.9% A note about terminology: Earned loss ratio is the ratio of claims incurred to net premiums earned. Operating expense ratio is the ratio of operating expenses to net premiums earned. Combined ratio is the ratio of claims plus expenses to net premiums earned. When the combined ratio is 100% or more, it signifies an underwriting loss. When the combined ratio is less than 100%, it signifies an underwriting profit. Return on equity excludes Lloyd s Sources: IBC, MSA, SCOR, AMF 14 IBC Facts 2016

17 Return on equity (ROE), 1975 to 2015 (%) Average ROE Excluding Lloyd s Sources: IBC, MSA Return on investment (ROI) compared with Government of Canada bond yield, 1989 to 2015 (%) 12 8 P&C ROI 4 Yield for 3 5 year Government of Canada bonds Sources: IBC, MSA, Bank of Canada IBC Facts

18 Catastrophic losses Insured losses for a given disaster are deemed catastrophic when they total $25 million or more. Catastrophic losses for a year are the sum total of insured losses from these natural disasters. Catastrophic losses due to natural disasters have increased dramatically over the last decade. In 2015, catastrophic losses plus loss adjustment expenses accounted for approximately $602 million, a welcome reduction from the previous six years in a row when insured losses were close to or more than $1 billion. The year 2013 was a recordbreaker for catastrophic losses, when insurers paid out more than $3.6 billion, including $1.9 billion as a result of the floods in southern Alberta. As well, at the end of 2013, a massive winter storm hit southern Ontario and parts of Eastern Canada. At the height of power outages, more than 300,000 Greater Toronto Area residents had no electricity. Milestone losses of the past decade include the hailstorms in Alberta during the summer of 2014 that cost insurers $575 million in insured losses. They also include the Slave Lake fire that ravaged a remote area of Alberta, causing more than $780 million in insured losses in the spring of 2011, and the Toronto rains of 2005 that generated $740 million in claims. (All figures in this section are in 2015 dollars.) Before 2013, the record year for insured losses was 1998, the year that an ice storm occurred in Quebec and Ontario that included six days of freezing rain, month-long power outages and $2.2 billion in insured losses. Catastrophic losses in Canada in $000,000,000, 1983 to Loss + Loss Adjustment Expenses in 2015 dollars Estimated Trend Line Source: IBC, PCS Canada, CatIQ, Swiss re, Munich Re, Deloitte 16 IBC Facts 2016

19 Catastrophic losses by event in $000, 1983 to 2015 The table below shows the steady increase in the number and cost of catastrophic losses in Canada. This is not a Canada-only phenomenon; it is part of a worldwide trend. The table includes insured losses by event and annual totals from 1983 to From 2009 on, it sets out insured losses for the two largest events in the year and annual totals. The figures are reported by Property Claim Services Canada (PCS Canada), which tracks insured losses arising from catastrophic events in Canada. Figures for 2014 and 2015 are also reported by Catastrophe Indices and Quantification Inc. (CatIQ). Insured losses for all events are available through subscription to PCS Canada and CatIQ. Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 1983 July 9, Saskatchewan Storm 16,385 35,703 Aug. 3, Edmonton AB Storm 22,060 48,069 Total ,445 83, April 30, Bruce County ON Wind 39,066 81,614 Total ,066 81, May 30, Leamington ON Storm 16,390 32,936 May 31, Barrie ON Tornado 83, ,643 Total , , May 29, Montreal QC Hail 45,473 87,757 Total ,473 87, May 29, Montreal QC Hail 24,891 46,003 July 14, Montreal QC Storm 44,678 82,573 July 31, Edmonton AB Tornado 148, ,227 Total , , June 7, Medicine Hat AB Tornado 50,027 88,953 July 6, Slave Lake AB Flooding 21,500 38,229 Aug.16, Calgary AB Hail 37,127 66,015 Total , , July 20, Harrow ON Flooding 13,807 23,368 Total ,807 23, July 9, Calgary AB Hail 16,279 26,288 Total ,279 26, March 27 28, Sarnia ON Tornado 25,407 38,847 July 3, Red Deer AB Storm 28,202 43,121 Aug. 27, Maskinongé QC Tornado 17,667 27,013 Sept. 7, Calgary AB Hail 342, ,052 Nov. 30, Ontario Wind 5,429 8,301 Total , ,333 IBC Facts

20 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 1992 July 31, Calgary AB Hail 22,078 33,275 July 31, Toronto ON Flooding 4,898 7,382 Aug. 28, Alberta Hail 5,263 7,932 Aug. 28, Elmira and Aurora ON Flooding 4,348 6,553 Sept. 1, Alberta Hail 7,421 11,185 Oct. 6 7, Avalon NL Wind 8,216 12,383 Nov , southern Ontario Wind 36,437 54,915 Nov , Quebec Wind 12,056 18,170 Total , , March 13 14, Quebec Storm 18,447 27,283 July 25 Aug.14, Winnipeg MB Flooding 184, ,369 July 29 30, Alberta Hail 8,116 12,004 July 29, Saskatchewan Flooding 5,383 7,961 July 29 30, Quebec Flooding 7,624 11,276 Total , , Jan , southern Ontario Flooding 13,145 19,419 Jan. 28, southern Ontario Storm 6,250 9,233 May 18, southern Manitoba Storm 8,260 12,202 May 22, Saskatchewan Storm 8,666 12,802 June 18, southern Alberta Hail 8,263 12,207 Aug. 4, Salmon Arm BC Storm 10,225 15,105 Aug. 4, Aylmer QC Tornado 6,911 10,209 Aug. 27, southern Manitoba Hail 8,112 11,984 Aug. 28, southern Ontario Storm 7,219 10,664 Total , , June 6 9, Calgary AB Flooding 20,764 30,008 July 4, Edmonton AB Hail 14,698 21,242 July 10, southern Alberta Hail 26,389 38,138 July 13 15, southern Ontario Storm 53,439 77,230 July 17, Calgary AB Hail 52,304 75,590 July 30, southern Manitoba Storm 8,468 12,238 Aug. 26, Regina SK Storm 12,294 17,767 Oct. 5 6, Hamilton ON Storm 16,325 23,593 Total , , July 16, Winnipeg MB Flooding/hail 146, ,089 July 16 18, Calgary AB Hail 119, ,594 July 24 25, Calgary AB Hail 85, ,362 July 19 20, Saguenay QC Flooding 207, , IBC Facts 2016

21 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars July 23, Outaouais QC Wind/hail 1,571 2,237 Aug. 8, Ottawa ON Flooding 20,257 28,847 Aug. 8, Outaouais and Estrie QC Flooding 7,882 11,224 Nov. 9, Montreal and Quebec City QC Flooding 76, ,286 Total , , Feb. 27, Niagara Peninsula ON Wind 23,776 33,297 April 6 7, Sudbury ON Flooding 20,558 28,790 July 14 15, Chambly QC Flooding 29,865 41,825 Total , , Jan., southern Quebec Ice storm 1,384,100 1,919,245 Jan., eastern Ontario Ice storm 170, ,729 Jan., southern New Brunswick Ice storm 20,000 27,733 July 4 9, Calgary AB Hail 69,742 96,706 Sept , Niagara Peninsula ON Wind 63,403 87,917 Total ,707,245 2,367, Jan., southern Ontario Snowstorm 120, ,560 June 5, Drummondville QC Hail 20,555 28,012 July 5 6, Quebec Wind 43,321 59,036 July 28, Atlantic provinces Flooding 15,756 21,471 Sept. 22, Atlantic provinces Flooding 15,648 21,325 Total , , May 12, southern Ontario Storm 128, ,022 July 7, southern Manitoba Storm 18,559 24,628 July 14, Pine Lake AB Tornado 17,916 23,775 Aug. 9, Calgary AB Storm 28,058 37,234 Oct. 30, Sydney NS Flooding 4,010 5,322 Dec. 17, Atlantic provinces Wind 19,756 26,217 Total , , Feb. 1, Atlantic provinces Snowstorm 13,746 17,794 Feb. 8, southern Ontario Storm 54,078 70,003 Feb. 8, Quebec Storm 53,843 69,699 July 13, Alberta Storm 25,513 33,026 July 28, Edmonton, AB Storm 23,902 30,940 Sept. 19, Atlantic provinces Flooding 6,362 8,235 Dec. 14, southwestern British Columbia Wind 27,035 34,996 Total , ,694 IBC Facts

22 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 2002 Jan. 31, southern Ontario Wind 34,508 43,687 March 9, Ontario Wind 110, ,512 June 8, southern Alberta Flooding 42,828 54,221 June 10, southern Ontario Storm 53,943 68,292 July 26, southwestern Ontario Storm 60,060 76,036 Total , , March 30 April 1, New Brunswick Flooding 4,695 5,782 March 30 April 1, Newfoundland and Labrador Flooding March 30 April 1, Prince Edward Island Flooding March 30 April 1, Nova Scotia Flooding 18,557 22,854 Aug , Alberta Wind/hail 33,565 41,336 Aug , Saskatchewan Wind/hail 29,055 35,782 Summer, British Columbia Forest fires 200, ,304 Sept , Prince Edward Island Hurricane 6,665 8,208 Sept , Nova Scotia Hurricane 132, ,387 Total , , July 2 11, Edmonton AB Hail 166, ,722 July 15, Calgary AB Hail 21,500 25,997 July 15, Peterborough ON Flooding 87, ,564 Sept. 9, eastern Ontario Rainstorm 57,600 69,648 Total , , June 6 8 and June 17 19, Alberta Flooding 300, ,953 June and July 1 2, Manitoba Flooding 60,000 70,991 July 5 and Sept. 26, Quebec Rainstorm 57,000 67,441 Aug. 19, Ontario Wind/rainstorm 625, ,959 Total ,042,400 1,233, Feb. 6, British Columbia Storm 6,406 7,433 Aug. 10, Alberta Hail 13,593 15,773 Sept. 24, Greater Toronto Area ON Wind/hail 4,628 5,370 Nov.15 Dec. 15, British Columbia Storm 133, ,434 Total , , Jan. 5, British Columbia Storm 16,235 18,434 June 5, Alberta Storm 44,621 50,664 June 22 24, Manitoba Storm 17,607 19,991 Summer, Manitoba Storm 47,400 53,819 July 7, Alberta Forest fires 7,376 8,375 July 28 29, Alberta Hail 16,581 18,826 Aug. 1, Newfoundland and Labrador Wind 6,039 6,857 Total , , IBC Facts 2016

23 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 2008 Jan. 9, Ontario Storm 28,017 31,087 April/May, New Brunswick Flooding 8,010 8,887 June 10, several regions in Quebec Hail 125, ,694 July 1, Lethbridge AB Wind/hail 20,500 22,746 July 9, Swift Current, SK Hail/windstorm/lightning/ water Aug. 8, Red Deer, AB Hail/windstorm/lightning/ water Sept., Saskatchewan Hail 132, ,461 Dec. 21, Vancouver, BC Winter storm Total , , Jan. 6 8, Fraser Valley, BC Flood/water Feb , Ontario Winter storm April 25 27, Ontario Wind/thunderstorm July 11 13, Hamilton and Ottawa ON, Montreal and Mirabel QC Wind/thunderstorm July 24 28, Ontario Wind/thunderstorm 227, ,204 Aug. 1 3, Alberta Wind/thunderstorm 376, ,430 Aug , Manitoba Wind/thunderstorm Aug. 20, southern Ontario Wind/thunderstorm Aug. 23, New Brunswick and Newfoundland and Labrador Hurricane Bill Aug. 29, New Brunswick, Newfoundland and Labrador, Tropical Storm Danny and Quebec Total ,032,782 1,142, March 13, Toronto and Hamilton ON Wind/thunderstorm May 28, Winnipeg, MB Flood/water June 5 6, Leamington and Windsor/Essex County ON Wind/thunderstorm 127, ,228 June southern Alberta and Saskatchewan Flood/water June 29, various regions of Alberta and Saskatoon, SK Hail/flood/windstorm/ lightning July 1 3, Swift Current, Wynyard and Hudson Bay region SK Wind/thunderstorm July 12 13, Calgary and southern Alberta Wind/thunderstorm 530, ,948 Aug. 22, Calgary AB Hail/windstorm/lightning/ water Sept , Newfoundland and Labrador Hurricane Igor Sept. 30 Oct. 1, Ontario and Quebec Flood/windstorm/ lightning/water (remnants of Nicole) Dec., Atlantic provinces Storm Total ,235,299 1,342,394 IBC Facts

24 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 2011 March 5 7, Ontario and Quebec Winter storm April 10 11, Thunder Bay ON and southern and eastern Ontario Hail/windstorm/lightning/ water April 27 28, Ontario and Quebec Wind/thunderstorm May 14 17, Slave Lake AB Fire 742, ,463 June 2, Manitoba and Saskatchewan Hail/windstorm/lightning/ water June 7, southern Ontario Hail/windstorm/lightning/ water June 17 21, Weyburn and Estavan, SK Flood/water June 23 24, Ontario and Quebec Flood/hail/windstorm/ lightning July 7, Red Deer, Bergen, Olds, Bowden and Innisfail, AB Hail/windstorm/lightning/ water July 18 19, Alberta, Manitoba and Saskatchewan Wind/thunderstorm August 15, Saskatoon, Biggar and Warman, SK Flood/hail/windstorm/ lightning Aug. 21, Goderich ON Wind/thunderstorm Aug , New Brunswick, Quebec and Ontario Wind/thunderstorm (remnants of Hurricane Irene) Nov. 27, Alberta Wind/thunderstorm 238, ,828 Total ,044,397 2,158, March 2 3, Ontario and Quebec Windstorm/winter storm/ water May 26 29, Thunder Bay ON and Montreal QC Wind/thunderstorm 259, ,157 June 25 27, Saskatchewan Windstorm/hail/lightning/ water July 11 12, Edmonton AB Wind/thunderstorm July 22 23, Hamilton and Ottawa ON and surrounding areas Wind/thunderstorm July 26, southern Alberta (Cardston to Nanton) Wind/thunderstorm Aug. 11, southern Quebec Flood/windstorm/lightning/ water Aug. 12, region around Calgary AB Wind/thunderstorm 562, ,628 Aug. 14, Calgary AB Hail/windstorm/lightning/ water Oct , Ontario and Quebec Wind/thunderstorm (remnants of Hurricane Sandy) Total ,460,893 1,519, IBC Facts 2016

25 Date and place Event type Loss plus loss adjustment expenses Loss plus loss adjustment expenses in 2015 dollars 2013 April 11 14, southwestern Ontario Wind/thunderstorm May 28 June 2, parts of Ontario and Quebec Wind/thunderstorm June 19 24, southern Alberta Wind/thunderstorm 1,827,000 1,883,536 July 2, Edmonton AB Hail/windstorm/lightning/ water July 8 9, Toronto and southern Ontario Wind/thunderstorm 999,500 1,030,429 July 13, Manitoba and Saskatchewan Hail/windstorm/lightning/ water July 19, central and southern Ontario and southwest Quebec Wind/thunderstorm July 19, Regina SK Hail/lightning/water July 23, southern Alberta Hail/windstorm/lightning/ water Dec , Ontario, Quebec, New Brunswick, Nova Scotia, Winter storm Prince Edward Island and Newfoundland and Labrador Total ,540,388 3,649, June 17 18, southern Ontario Wind/thunderstorm June 28 July 1, southern Manitoba and Saskatchewan Wind/thunderstorm 109, ,623 July 5, Quebec, New Brunswick, Nova Scotia and Prince Edward Island July 17, Alberta and Saskatchewan Aug. 4 5, southern Ontario Windstorm/flood/water (remnants of Arthur) Hail/windstorm/lightning/ water Wind/thunderstorm Aug. 7 8, Calgary and southern Alberta Wind/thunderstorm 568, ,262 Nov , Ontario and Quebec Wind/thunderstorm Total ,013,436 1,024, June 11 12, Alberta, Saskatchewan and Manitoba June 22 23, Ontario July 21 22, Alberta and Saskatchewan Aug. 4 5, Alberta Hail/windstorm/lightning/ water Flood/windstorm/ lightning/water Hail/windstorm/lightning/ flood/water Hail/windstorm/flood/ water Windstorm/water 349, , , ,000 Aug. 29, British Columbia Total , ,390 Source: 1983 to 2007: IBC, PCS Canada, Swiss Re and Deloitte Source 2008: IBC, CatIQ Source 2009, 2011, 2012: PCS Canada, CatIQ Source 2010 IBC, PCS Canada, CatIQ Source 2013 to 2015 PCS Canada, CatIQ IBC Facts

26 Regulation and regulatory issues The federal and provincial governments regulate the P&C insurance industry. The provincial governments regulate market conduct, and the federal Office of the Superintendent of Financial Institutions (OSFI) regulates solvency. While it is impossible to pinpoint exactly how much the industry pays per year to comply with regulatory requirements, it s estimated to be hundreds of millions of dollars. Auto insurance, in particular, is very highly regulated. The provincial governments determine claims handling, underwriting and how complaints are managed, and administer rate approval systems. To enable the industry to respond to changing market conditions, IBC is advocating for auto insurance reform in several provinces, including Alberta, Ontario, and Newfoundland and Labrador. Through IBC, the P&C insurance industry also engages with regulators and the federal government to ensure that new regulatory initiatives balance the needs of both consumers and insurers. Enhancing the efficiency and cost effectiveness of insurance regulation can also bring significant benefits to consumers by reducing costs that can result in lower premiums. A major regulatory change in 2015 was OSFI s 2015 Minimum Capital Test Guideline for covering claims as a result of an earthquake, which took effect in January following an 18-month consultation with the industry and other stakeholders. In recent years, standards and guidelines developed by international bodies have had a greater influence on Canada s regulatory system. This is a result of the global financial crisis of 2008, which spurred a revamping of rules worldwide. Particularly significant is the guidance provided by the G20, a forum for the governments and central bank governors of 20 major economies; the Financial Stability Board, which monitors and makes recommendations about the global financial system; and the International Association of Insurance Supervisors, which is leading the development of the Global Insurance Capital Standards that will be re-released for comment in mid To better align with international trends and the evolving expectations of regulators, IBC has revised its Code of Rights and Responsibilities, and Standards of Sound Marketplace Practice. All members are urged to adopt the new voluntary code and standards, and post them on their websites. Market conduct going global The International Association of Insurance Supervisors Insurance Core Principles are driving regulatory activity in Canada. For instance, they are influencing the market conduct regulation governing how insurance companies treat their customers. The increased influence of international regulatory bodies means that regulation of the P&C insurance market in Canada is becoming more consistent with regulations that are working around the globe. IBC monitors global regulations to assess their impact on Canadian insurers. This involves ensuring that international regulations are sensitive to the domestic regulatory landscape and the particulars of the P&C insurance industry in Canada. IBC also participates in the discussions led by the Global Federation of Insurance Associations, providing input into the development of many aspects of international regulations that affect P&C insurers. 24 IBC Facts 2016

27 Canada s P&C insurance industry by line of business 26 Mandatory insurance 26 Optional insurance 27 No-fault insurance 28 What s mandatory where 40 Premiums and claims 41 Average losses 42 Major issues Home insurance 44 Types of coverage 45 Premiums and claims 45 Major issues Business insurance 47 Types of coverage 48 Premiums and claims 48 Major issues 2 IBC Facts

28 Auto insurance In the event of an automobile collision, auto insurance covers the owner of the vehicle, the driver operating the vehicle with the owner s consent, passengers, pedestrians and property. In 2014, auto insurance, which is required by law in every Canadian province and territory, accounted for approximately half the insurance written by P&C insurers. There are about 109 private P&C insurance companies competing for auto insurance business in Canada. In addition to these private insurers, government-owned insurers in British Columbia, Saskatchewan, Manitoba and Quebec provide the mandatory component of auto insurance in those provinces. Mandatory insurance There are three kinds of mandatory coverage: Accident benefits (AB) coverage helps people recover from injuries sustained in a collision. It pays for medical care, rehabilitation, income replacement and other benefits to aid the recovery of collision victims, including drivers, passengers and pedestrians. In the case of a death, this coverage also provides funeral expenses and survivor benefits. This insurance is mandatory in all provinces except Newfoundland and Labrador. In some provinces, it is referred to as Section B benefits. Accident benefits are paid on a no-fault basis. This means that the benefits are available to anyone injured in a vehicle collision regardless of whether he or she was at fault for the collision. See the next page for more detail on no-fault insurance. Third-party liability (TPL) coverage protects the insured driver and/or owner of the vehicle if the motor vehicle injures or kills someone or damages someone s property through the fault of the driver. Third-party liability coverage is required by law in all provinces, and in some provinces may include direct compensation property damage (DCPD) coverage. DCPD covers damage to an insured vehicle and to any property inside the vehicle when another motorist is responsible for the collision. It is called direct compensation because drivers collect from their own insurer, even though someone else is at fault. DCPD is mandatory in Ontario, New Brunswick, Nova Scotia and Prince Edward Island. Uninsured auto coverage protects an insured person if he or she is injured through the fault of a driver who does not have auto insurance or is unidentified. Optional insurance Collision and comprehensive insurance are optional in all provinces except Saskatchewan and Manitoba, where both are mandatory. Collision coverage pays for the cost of repairing or replacing a vehicle following a collision with another vehicle or object, such as a tree, house, guardrail or pothole. Comprehensive coverage pays for repairs to or replacement of a vehicle for damage caused by something other than a collision; for example, fire, theft, vandalism or wind. 26 IBC Facts 2016

29 No-fault insurance The concept of no-fault insurance developed over time as a way to reduce the legal and administrative costs associated with having to prove fault in a vehicle collision. Before no fault, insurers required those involved in a collision to establish which driver was at fault. The insurer of the at-fault driver would be responsible for covering the losses resulting from injuries arising from the incident to those who were not at fault. This process was lengthy and required expensive investigation and often litigation. In a pure no-fault car insurance system, if a person is injured or his or her car is damaged in a collision, the person deals directly with his or her own insurance company, regardless of who is at fault. In most provinces and territories, the person who did not cause the collision also has the right to sue the at-fault driver for damages but, in some provinces, only if his or her injuries meet a prescribed threshold. Every province offers some degree of no-fault insurance. Two provinces Manitoba and Quebec have pure no-fault systems, with no right to sue respecting bodily injury or death. Other provinces use a mix of no-fault and tort-based systems. Some of them specify accident benefits limits and the right to sue for additional compensation under certain specified situations, such as when injuries are determined to be permanent and serious. Every province and territory offers some degree of no-fault insurance. Pure no-fault systems with no right to sue Mix of no-fault and tort-based systems IBC Facts

30 What s mandatory where Auto insurance comes under provincial jurisdiction, so the rules are slightly different in each province. The following charts compare provincial regulations and have been abbreviated for space and edited for consistency and clarity. The information is for educational purposes only; IBC recommends consulting a qualified professional for further assistance. A note about terminology: Some provincial acts refer to spouse and some to spouse/partner, which have different definitions. Some provinces use the term unpaid housekeeper, which is called homemaker or non-earner benefit in other provinces. Head of household is usually defined as the spouse or partner with the larger income in the previous 12 months. For the full legal terminology, see the links in the Sources section at the end of each provincial chart. Comparison of mandatory private passenger auto insurance coverage by province Quebec alberta nun British Columbia as of January 1, 2016 sask bc ns Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: $2,500 Disability income benefits: $200,000 available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $20,000 Up to $150,000/person 75% of gross weekly wages to maximum $300/week; 104 weeks for temporary disability, lifetime for total disability; nothing payable for the first seven days of disability; homemaker up to $145/week, maximum 104 weeks Death benefits: Death following a collision; death of head of household $5,000, plus $145/week for 104 weeks to first survivor, plus $1,000 and $35/week for 104 weeks to each child; death of spouse/partner of head of household $2,500; death of dependent child, according to age, maximum $1,500 Impairment benefits: N/A Right to sue for pain and suffering? Yes Right to sue for economic loss Yes in excess of no-fault benefits? Administration: Government (government and private insurers compete for optional and additional coverage) Source: ICBC Autoplan Insurance, 28 IBC Facts 2016

31 Alberta as of January 1, 2016 Quebec alberta nun Mandatory minimum third-party $200,000 is available for any one accident; however, if a claim involving both bodily injury liability: and property damage reaches this figure, payment for property damage will be capped at $10,000 Medical payments: Up to $50,000/person Funeral expense benefits: $5,000 Disability income benefits: 80% of gross weekly wages to maximum $400/week; up to 104 weeks for total disability; nothing payable for the first seven days of disability; non-earner benefit (unemployed person 18 years or older) $135/week, up to 26 weeks Death benefits: Death of head of household $10,000, plus 20% ($2,000) for each dependent survivor after first, plus additional $15,000 for first survivor and $4,000 for each remaining survivor; death of spouse/adult interdependent partner of head of household $10,000; death of dependent relative, according to age, maximum $3,000; grief counselling up to $400 per family with respect to death of any one person Impairment benefits: N/A Right to sue for pain and suffering? Yes. If injury is deemed minor under provincial legislation, maximum award is $4,956 Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers sask bc ns Sources: Alberta Superintendent of Insurance Bulletin , Automobile Accident Insurance Benefits Regulations, Alberta Standard Automobile Policy, S.P.F. No. 1, Alberta Superintendent of Insurance Bulletin , IBC Facts

32 Quebec alberta Saskatchewan as of January 1, 2016 sask bc Mandatory minimum third-party liability: $200,000 is available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $10,000 If no-fault option selected: If tort option selected: Medical payments: Up to $6,719,606 /person Up to $26,273/person for noncatastrophic injury, up to $197,056 for catastrophic injury Funeral expense benefits: $10,078 $6,569 Disability income benefits: Death benefits: Impairment benefits: 90% of net wages based on gross annual income of maximum $94,539/year; nothing payable for the first seven days of disability unless catastrophically injured 50% of deceased s income benefit; minimum $69,322 to spouse; 5% of calculated death benefits to each dependent child; if no spouse, $15,404 to each surviving parent or child (21 years or older), to maximum $69,322; death of dependent child $30,809 Up to $192,561 /person for non-catastrophic injury, up to $235,186 for catastrophic injury Up to two years; $396/week for total disability, $198/week for partial disability; maximum $20,592/year 45% of deceased s net income; minimum $59,116 to spouse; 5% of calculated death benefits to each dependent child; if no spouse or dependant, estate receives up to $13,137 Up to $13,137/person for noncatastrophic, up to $170,783 for catastrophic injury Right to sue for pain and suffering? Yes Yes, subject to deductible of $5,000 Right to sue for economic loss in excess of no-fault benefits? Yes Yes Administration: Government (government and private insurers compete for optional and additional coverage) Sources: SGI Canada Personal Injury Coverage, Your Guide to No Fault Coverage, 2016, Your Guide to Tort Coverage, 2016, SGI Auto Pak: Policy booklet, 2016, 30 IBC Facts 2016

33 Quebec alberta nun nwt pei yukon Manitoba as of March 31, 2016 sask bc ns newf ont nb Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: Disability income benefits: Death benefits: Impairment benefits: Right to sue for pain and suffering? Right to sue for economic loss in excess of no-fault benefits? Administration: $200,000 is available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $20,000 No time or amount limit $8,301 (maximum) 90% of net wages based on gross annual income of maximum $93,000/year; nothing is payable for the first seven days of disability Death any time after injury; benefits for partners depend on wage and age of deceased and range from $60,914 to $465,000; benefits for dependent children depend on their age and range from $28,933 to $53,300; disabled dependants receive an additional $26,649; non-dependent children or parents receive $13,565 Minimum $760/week to maximum $152,281 for non-catastrophic injury; maximum $240,454 for catastrophic injury No Yes Government Sources: Guide to Autopac, Personal Injury Protection Plan (PIPP) Guide, Services and Support Guide for Fatality Claims, IBC Facts

34 Quebec alberta nun nwt pei yukon Ontario as of June 1, 2016 sask bc ns newf ont nb mb Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: Disability income benefits: Death benefits: Impairment benefits: Right to sue for pain and suffering? Right to sue for economic loss in excess of no-fault benefits? Administration: $200,000 is available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $10,000 Up to $3,500 for minor injury; up to $65,000/person for non-minor and non-catastrophic injury for up to 5 years; up to $1 million for catastrophic injury $6,000 (if optional indexation coverage is purchased, this amount may be higher) Income Replacement Benefit: 70% of gross wages to maximum $400/week, minimum $185/week for 104 weeks (longer if victim is unable to pursue any suitable occupation); nothing is payable for the first seven days of disability Non-earner Benefit (disabled unemployed persons, students enrolled in education full time, or students who completed their education less than one year before the accident and are not employed): $185/week for 104 weeks; 4-week wait; limit two years. Not available if the insured is eligible for, and elects to receive, the income replacement or caregiver benefit Death within 180 days of accident (or three years if continuously disabled prior to death); $25,000 minimum to spouse, $10,000 to each surviving dependant, $10,000 to each parent/guardian (if optional indexation coverage is purchased, these amounts may be higher) N/A Yes, if injury meets severity test (called threshold ), and subject to deductible. Lawsuit allowed only if injured person dies or sustains permanent and serious disfigurement and/or impairment of important physical, mental or psychological function. The court assesses damages and deducts $36,905 ($18,453 for a Family Law Act claim) Yes. Income replacement award above no-fault benefit is based on net income after deductions for income tax, Canada Pension and Employment Insurance. Injured person may sue for 70% of net income loss before trial, 100% of gross after trial; also for medical, rehabilitation and related costs when injury meets severity test for pain and suffering claims Private insurers Sources: Ontario Automobile Policy, Statutory Accident Benefits Schedule (SABS), Insurance Act, O. Reg. 34/10, Financial Services Commission of Ontario: Auto Bulletins, 32 IBC Facts 2016

35 Quebec as of January 1, 2016 Quebec alberta Private Insurance Mandatory minimum third-party liability: Public Insurance $50,000 is available for any one accident; liability limits relate to property damage claims within Quebec and to personal injury and property damage claims outside Quebec sask bc Medical payments: Funeral expense benefits: $5,107 Disability income benefits: No time or amount limit 90% of net wages based on gross annual income of maximum $71,500/year; nothing is payable for the first seven days of disability; indexed Death benefits: Death any time after accident; benefits depend on gross annual income multiplied by a factor between one and five, depending on age of the victim; benefits for spouse range from $68,148 to $357,500; benefits for dependent child depend on their age and range from $32,369 to $59,631; if there is no surviving spouse/dependant, parents or estate receive $54,621 Impairment benefits: Up to $238,965 Right to sue for pain and suffering? No Right to sue for economic loss in No excess of no-fault benefits? Administration: Bodily injury: government Property damage: private insurers Sources: Quebec Auto Insurance Policy Form Q.P.F. No.1, March 1, 2014, The Insurance Policy for All Quebecers: Accident Victim, Accident Victim - Compensation Table, 2016, Accident Victim - Table of Death Benefits, 2016, IBC Facts

36 Quebec alberta nun nwt pei yukon New Brunswick as of January 1, 2016 sask bc ns newf ont nb mb Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: $2,500 Disability income benefits: $200,000 is available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $20,000 Up to $50,000/person; four-year time limit Maximum $250/week; 104 weeks for partial disability, lifetime for total disability; must be disabled for at least seven days to qualify; unpaid housekeeper $100/week, maximum 52 weeks Death benefits: Death within 180 days (or two years if continuously disabled prior to death); death of head of household $50,000, plus $1,000 to each dependent survivor after first; death of spouse/partner $25,000; death of dependant $5,000 Impairment benefits: N/A Right to sue for pain and suffering? Yes. If injury is deemed minor under provincial legislation, maximum award is $7, Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers Sources: New Brunswick Standard Owner s Policy N.B.P.F. No.1, (Effective October 1, 2010); Injury Regulation, NB Reg , Financial and Consumer Services Commission. Notice Re: Annual Indexation PDF, Financial and Consumer Services Commission: Automobile Insurance, 34 IBC Facts 2016

37 Quebec alberta nun nwt Nova Scotia as of January 1, 2016 sask bc ns newf Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: $2,500 Disability income benefits: Death benefits: Impairment benefits: $500,000 is available for any one accident Up to $50,000/person; four-year time limit (Consumers have option to purchase additional coverage) Maximum $250/week; 104 weeks for partial disability; lifetime for total disability; must be disabled for at least seven days to qualify; unpaid housekeeper $100/week, maximum 52 weeks Death within 180 days after accident (or two years if continuously disabled prior to death); death of head of household $25,000, plus $1,000 to each dependent survivor after first; death of spouse/partner $25,000; death of dependant $5,000 N/A Right to sue for pain and suffering? Yes. If injury is deemed minor under provincial legislation, maximum award is $8,385 Right to sue for economic loss in excess of no-fault benefits? Administration: Yes Private insurers Sources: Nova Scotia Standard Automobile Policy NSPF No.1, 2013, Automobile Insurance Contract Mandatory Conditions Regulations, Office of the Superintendent of Insurance: Bulletins (Nova Scotia), IBC Facts

38 Prince Edward Island as of January 1, 2016 Quebec alberta nun nwt pei yukon Mandatory minimum third-party $200,000 is available for any one accident; bc however, ns if a claim involving both bodily injury liability: and property damage reaches this figure, payment for property damage will be capped at $10,000 Medical payments: Up to $50,000/person; four-year time limit Funeral expense benefits: $2,500 Disability income benefits: Maximum $250/week; 104 weeks for partial disability; lifetime for total disability; must be disabled for at least seven days to qualify; unpaid housekeeper $100/week, maximum 52 weeks Death benefits: Death within 180 days after accident (or two years if continuously disabled prior to death); death of head of household $50,000, plus $1,000 to each dependent survivor after first; death of spouse of head of household $25,000; death of dependant $5,000 Impairment benefits: N/A Right to sue for pain and suffering? Yes. If injury is deemed minor under provincial regulation, maximum award is $7,455 Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers sask newf ont nb Sources: Insurance Act, RSPEI 1988, c I-4, Prince Edward Island Standard Automobile Policy S.P.F. No.1, for accidents occurring on or after October 1, 2014, Prince Edward Island Standard Automobile Policy S.P.F. No.1, for accidents occurring on or after October 1, 2015, Bill 46, An Act to Amend the Insurance Act (No. 2) (Chapter 36), Prince Edward Island Superintendent of Insurance Notices, October 1, 2015, Automobile Insurance Reforms, 36 IBC Facts 2016

39 Quebec alberta nun nwt pei Newfoundland and Labrador as of January 1, 2016 sask bc ns newf ont Mandatory minimum third-party liability: Medical payments: Funeral expense benefits: (Optional to buy) $1,000 Disability income benefits: $200,000 is available for any one accident; however, if a claim involving both bodily injury and property damage reaches this figure, payment for property damage will be capped at $20,000 (Optional to buy) Up to $25,000/person; four-year time limit (Optional to buy) Maximum $140/week; 104 weeks for partial disability; lifetime for total disability; must be disabled for at least seven days to qualify; unpaid housekeeper $70/week, maximum 12 weeks Death benefits: (Optional to buy) Death within 180 days (or two years if continuously disabled prior to death); death of head of household $10,000, plus $1,000 to each dependent survivor after first; death of spouse $10,000; death of dependant $2,000 Impairment benefits: N/A Right to sue for pain and suffering? Yes. Awards are subject to deductible of $2,500 Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers Sources: Automobile Insurance Act, Chapter A-22, an Act Respecting Automobile Insurance, Newfoundland & Labrador Standard Automobile Policy S.P.F. No.1 (not available online) IBC Facts

40 Yukon as of January 1, 2016 Quebec alberta nun nwt pei yukon Mandatory minimum third-party $200,000 is available bc for any one accident; ns however, if a claim involving both bodily injury liability: and property damage reaches this figure, payment for property damage will be capped at $10,000 Medical payments: Up to $10,000/person; two-year time limit Funeral expense benefits: $2,000 Disability income benefits: 80% gross wages to maximum $300/week; 104 weeks for temporary or total disability; nothing is payable for the first seven days of disability; unpaid housekeeper $100/week, maximum 26 weeks Death benefits: Death any time after accident; death of head of household $10,000, plus $2,000 to each dependent survivor other than the first, and 1% of total principal sum to each dependant/survivor after first, for 104 weeks; death of spouse of head of household $10,000; death of dependent relative, according to age, maximum $3,000 Impairment benefits: N/A Right to sue for pain and suffering? Yes Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers sask newf ont nb mb Sources: Insurance Act, O.I.C. 1988/090, Yukon Territories Standard Automobile Policy S.P.F. No.1 (not available online) 38 IBC Facts 2016

41 Northwest Territories and Nunavut as of January 1, 2016 Quebec alberta Quebec nun alberta nwt nun pei nwt yukon Mandatory minimum third-party $200,000 is available for any one accident; however, if a claim involving both bodily injury bc liability: and property damage reaches this figure, payment sask nsfor property bc damage will be nscapped at $10,000 Medical payments: Up to $25,000/person; four-year time limit Funeral expense benefits: $1,000 Disability income benefits: 80% of gross weekly wages to maximum $140/week; 104 weeks for temporary disability; lifetime for total disability; nothing is payable for the first seven days of disability; unpaid housekeeper $100/week, maximum 12 weeks Death benefits: Death within 180 days after accident (or two years if continuously disabled prior to death); death of head of household $10,000, plus $1,500 to single survivor or $2,500 to each survivor after first if more than one; death of spouse of head of household $10,000; death of dependant $2,000 Impairment benefits: N/A Right to sue for pain and suffering? Yes Right to sue for economic loss in Yes excess of no-fault benefits? Administration: Private insurers sask newf ont newf nb Sources: Northwest Territories Insurance Act, R.S.N.W.T. 1988, c.i-4, Northwest Territories Standard Automobile Policy S.P.F. No.1 (not available online) Nunavut Insurance Act, R.S.N.W.T.1988, c.i-4, Nunavut Territories Standard Automobile Policy S.P.F. No.1 (not available online) IBC Facts

42 Premiums and claims Private insurers wrote insurance policies totalling $21 billion in net written premiums for auto insurance in Automobile insurance premiums, like all insurance premiums, are determined based on risk. Insurers estimate how likely it is that a customer and a group of customers with the same set of circumstances will make a claim, and how much those claims will likely cost in a given year. A number of factors help to determine car insurance premiums. These include where a customer lives, the type of vehicle the customer drives, how the vehicle is used, and the customer s driving record and driver profile. (A driver profile includes the claims history of a group of customers of the same age, for example.) For a complete breakdown of how each dollar collected by insurers is spent, see Insurance Dollar on page 8. In 2014, Canadian private P&C insurers paid out $15.8 billion in net claims incurred to policyholders for all types of auto insurance coverage: third-party liability, accident benefits, collision and comprehensive, and other coverages. Third-party liability claims payouts accounted for 46.1% of all net claims incurred. The vast majority of claims 86% were for incidents involving private passenger vehicles. A note about terminology: The following three tables show claims costs by accident year, which is how much insurers paid out for all claims that occurred in that year (although in some instances claims may be paid in future years). Costs of claims for private passenger auto by type of coverage in $000, 1991 to 2014 Third-party liability (includes DCPD where applicable) Accident benefits Collision Comprehensive Other* Total ,557, , , , ,617 3,970, ,690, , , , ,816 4,134, ,891,894 1,013, , , ,268 4,458, ,806,506 1,584, , , ,716 4,934, ,838,017 1,462, , , ,178 4,855, ,012,891 1,501, , , ,216 5,079, ,368,067 1,026, , , ,225 4,857, ,649,663 1,171, , , ,126 5,390, ,031,026 1,365, , , ,722 6,038, ,293,534 1,633, , , ,651 6,798, ,467,501 1,789, , , ,821 7,197, ,711,895 2,127,839 1,061, , ,164 7,889, ,523,845 1,984,773 1,005, , ,122 7,470, ,216,368 1,727, , , ,549 6,762, ,239,365 1,914, , , ,110 7,078, ,475,227 2,217,100 1,059, , ,318 7,696, ,818,638 2,617,557 1,240, , ,271 8,760, ,861,390 2,917,946 1,260, , ,557 9,163, ,196,290 4,014,679 1,202, , ,486 10,553, ,331,351 3,983,952 1,154, , ,338 10,679, ,271,318 2,419,589 1,232, , ,587 9,032, ,416,293 2,391,869 1,234, , ,166 9,276, ,777,995 2,612,833 1,382, , ,987 10,091, ,949,530 2,650,275 1,486, , ,938 10,479,418 Sources: IBC Economic Trends, with data from GISA Figures may not add up to 100% as a result of rounding *Includes uninsured auto, underinsured motorist, all perils and specified perils 40 IBC Facts 2016

43 Private passenger auto insurance claims, 2014 Third-party liability (includes DCPD where applicable) Accident benefits Collision Comprehensive Number of insured vehicles 10,957,686 10,943,098 7,659,560 8,697,561 Number of claims 375, , , ,429 Total cost of claims in $000 4,961,453 2,650,854 1,490, ,138 Commercial auto insurance claims, 2014 Source: 2014 GISA Automobile Insurance Experience Exhibits Third-party liability (includes DCPD where applicable) Accident benefits Collision Comprehensive Number of insured vehicles 1,009, , , ,292 Number of claims 21,926 2,372 8,311 10,983 Total cost of claims in $ , ,552 84,630 81,088 Source: 2014 GISA Automobile Insurance Experience Exhibits Average losses P&C insurers track loss amounts in two ways. They calculate the average cost per claim (severity) and the average cost per insured vehicle (loss cost). The average cost per claim is calculated by dividing the total cost of claims by the number of claims. In 2014, the national average cost per claim for private passenger auto insurance claims was $10,498,189,803 1,087,267= $9,656. The average cost per insured vehicle is calculated by dividing the total cost of claims by the number of insured vehicles. In 2014, the national average cost per insured private passenger vehicle was $10,498,189,803 10,957,686= $ Average cost ($) per claim by type of coverage for private passenger automobile insurance, 2010 to 2014 Type of coverage Third-party liability 12,446 12,381 13,003 13,220 13,215 Accident benefits 35,940 24,163 24,624 25,150 24,970 Collision 5,115 5,322 5,490 5,694 5,827 Comprehensive 2,879 2,290 2,650 2,853 2,985 Source: 2014 GISA Automobile Insurance Experience Exhibits Average cost ($) per insured vehicle by type of coverage for private passenger vehicles, 2010 to 2014 Type of coverage Third-party liability Accident benefits Collision Comprehensive Source: 2014 GISA Automobile Insurance Experience Exhibits IBC Facts

44 Major issues - affordable, effective auto insurance In Canada, the provincial governments regulate almost all aspects of auto insurance. IBC works closely with these governments to improve the auto insurance product and system. A decade ago, auto insurance in Nova Scotia was in crisis, with insurers paying out more money in claims than they were collecting in premiums. As well, premiums were increasing for many drivers. Working with the industry, the government introduced reforms that reduced the average cost of auto insurance in the province by almost 25%. Today, Nova Scotia s premiums are among the lowest in the country. The highest premiums in Atlantic Canada are in Newfoundland and Labrador, where the average written premium was $1,110 in January The average premiums in the three other Atlantic provinces were around $800. The industry is working with the Newfoundland and Labrador government to find a solution to the pressures and increased claim costs that have forced up the province s auto insurance premiums. Also in Alberta, IBC is approaching the provincial government elected in May 2015 about that province s urgent need for auto insurance reform. Reform is also needed in Ontario; the province s 9.4 million drivers pay more for auto insurance than anywhere else in Canada. The Ontario government and insurance industry are working together to affect change, and in April 2015 the government announced its Building Ontario Up budget, which contains auto insurance reforms. The budget included updating the definition of catastrophic impairment and reducing the time period to claim medical, rehabilitation and attendant care benefits from 10 years to five years, except for children or individuals suffering catastrophic impairments. To benefit consumers, the industry has been calling for an examination of the mandate of the Financial Services Commission of Ontario (FSCO), and in March, the government announced a review. IBC filed its submission, focusing on key areas of FSCO s oversight and consumer interests. The government assembled an expert advisory panel to carry out the review, and in November the panel released its preliminary report, which reflects industry direction. IBC asked that the regulator s role be restructured so it can respond in a timely fashion to the rapid changes in industry structure, technology, market demands and consumer expectations, and the report echoes this recommendation. The proposed governance structure also appears to be largely compatible with IBC s proposal. The panel recommends that the new regulator support a model of operational independence from government while retaining ultimate accountability to the legislature. In other provinces namely, British Columbia, Saskatchewan and Manitoba the industry continues to advocate for private rather than public auto insurance. With such government-run insurance companies, there is limited choice for consumers; for example, the deductibles are fixed and there are no multivehicle discounts. And with a captive audience, public insurance companies have no incentive to develop new services. In comparison, private insurers have created novel products, such as first-accident forgiveness, replacement cost coverage and roadside assistance. And while taxpayers subsidize the premiums in every province with public auto insurance, private insurance adds to communities by paying taxes and investing in the private sector through corporate shares, bonds and real estate. In a world of rapidly changing technology that includes transportation network services (of which UberX is the most well known), private insurers are offering insurance solutions to meet evolving consumer needs. The insurance industry is also exploring the implications of autonomous vehicles and the best way to ensure consumers are well protected. Major issues - crime, including fraud Auto insurance crime increases insurers claim costs, and this drives up premiums for consumers. IBC has several initiatives to help deter insurance fraud, including a webpage and toll-free phone line that allow consumers to anonymously report fraud. IBC works with the non-profit organization CANATICS, which analyzes pooled auto insurance data to identify potential fraud. And IBC s awardwinning Provincial Auto Theft Network brings together law enforcement agencies and the insurance industry to reduce auto theft and auto insurance fraud. A major milestone in the fight against fraud was the 2015 conviction of a Peel Regional Police constable who was involved in a staged collision ring based in Brampton, Ont. The constable was paid to provide accident reports that made the ring s staged accidents look legitimate. In total, the ring had defrauded insurance companies of more than $900, IBC Facts 2016

45 Major issues - auto theft In 2015, IBC helped recover $23.6 million in stolen automobiles, an increase from the $18.8 million in Since auto theft defies jurisdictional, political, geographical and administrative boundaries, IBC fights auto theft with multiple partners. One partner is the Canada Border Services Agency, and in 2015 IBC and the agency seized more than $11 million in stolen cars at the Montreal and Halifax ports. Together they determined that organized crime was taking a different approach to avoiding detection when exporting stolen vehicles: The thieves were dismantling the cars and trucks and shipping parts rather than whole vehicles. To help consumers identify if their auto is a potential target, IBC publishes an annual list of the Top 10 most frequently stolen vehicles.. The 10 most frequently stolen vehicles in Canada, 2015 FORD F350 SD 4WD PU 2005 FORD F350 SD 4WD PU 2006 FORD F350 SD 4WD PU 2007 CADILLAC ESCALADE 4DR 4WD SUV 2006 FORD F350 SD 4WD PU 2003 FORD F250 SD 4WD PU 2006 FORD F350 SD 4WD PU 2001 FORD F250 SD 4WD PU 2004 FORD F250 SD 4WD PU 2007 FORD F250 SD 4WD PU 2001 Major issues - road safety IBC has long advocated for safer roads, and today s number one road safety issue is driver distraction. Texting while driving is of particular concern because drivers who text are 23 times more likely to be involved in a crash or near-crash event compared to drivers who are not texting. In February 2015, IBC launched its Drive Now. Text Later. Live Longer. campaign, and used social media to spark conversations about distracted driving across the country. Major issues - adapting to technological innovation IBC is exploring the industry s information needs about the array of new auto technologies and how insurers can adapt to these innovations. The year 2015 saw a significant increase in the uptake of telematics, also known as usage-based insurance (UBI). This technology provides valuable data that significantly change the way insurers see their business and how they calculate premiums. The data allow insurers to determine a customer s individual driving behaviour, and offer him or her personalized coverage. To record their driving information, most UBI consumers rely on a device that they ve installed in their vehicles. But growing in popularity are the UBI apps for smartphones. The apps provide consumers with increased convenience and a daily, rather than weekly, driving report. But they provide insurers with a pressing question: If consumers can turn off their smartphones, thereby disabling their UBI apps, how reliable is the driving information that the apps provide? In response to requests from IBC, the Canadian Council of Insurance Regulators has agreed to look into the vi-ability of electronic proof of insurance and a common regulatory approach to UBI. The council reconstituted its Electronic Commerce Committee specifically to do this work. The Autorité des marchés financiers released its Notice Regarding UBI Programs and confirmed IBC s position that existing legislation and regulations already adequately protect consumers. Major issues - severe weather - hail Climate change and severe weather are affecting auto insurance. In particular, the increased incidence of hail has driven up premiums. Property Claims Services Canada reports that the 2014 hail and windstorm in Airdrie, Alta., and surrounding area caused more than $170 million of insured damages just to motor vehicles. The SafetyMobile, an acclaimed driving simulator that IBC takes across Ontario every summer, allows consumers to experience how their reaction time slows down when using a cellphone. It also takes drivers through four staged-collision scenarios, teaching them how to detect, avoid and report them. The SafetyMobile inspired IBC s new SafetyMobile App for smartphones, which raises awareness of staged collisions. IBC Facts

46 Home insurance Unlike auto insurance, home or personal property insurance is not mandatory by law. However, it provides coverage for an individual s single largest investment a home. In fact, most banks and mortgage holders require proof of insurance on property as security for the loan or mortgage. As the second largest line of P&C policies after auto insurance, home or personal property insurance includes home, condominium, cottage, mobile home and tenant s insurance. It covers the property, personal belongings and personal liability of the policyholder and the policyholder s spouse or partner, children (with age limits) and dependants (with age and other limits). As with all insurance premiums, insurers consider a number of risk factors to determine the price an individual pays for home insurance. For example, insurers look at the neighbourhood and the frequency and types of past claims in that area; the cost to replace a home s contents and restore a home to its previous condition; the condition and age of the roof; the type of heating, electrical and plumbing systems; and details about any additional structures on the property. Insurers analyze these risks to estimate how likely it is that a policyholder, or a group of people with the same set of circumstances, will make a claim and how much that claim will cost. Types of coverage Home insurance generally covers a homeowner s residential building, outbuildings, contents, additional living expenses (if an insured event damages the home so that it is uninhabitable during the repairs) and personal liability. Tenant s insurance generally covers loss or damage to personal belongings, additional living expenses and personal liability. There are various types of policies: An all-perils policy provides coverage for a home and its contents from loss or damage from all perils except those specifically excluded. A peril is a chance event that is unexpected and accidental. Some perils are excluded from comprehensive policies for example, earthquakes. Coverage for this peril may be purchased as a policy add-on. However, there are some excluded perils, such as overland flooding, for which home insurance may not be available. But availability of coverage for some perils is changing. Following recent large floods, insurers have seen a higher demand for coverage. In 2015, at least two national insurers began offering coverage for overland flooding and a few others have announced they are considering offering such coverage. A broad-form policy provides coverage for a home from loss or damage from all perils except those specifically excluded, but only insures contents for perils that are specifically named in the policy. A standard, basic or named perils policy provides coverage for a home and its contents for perils specifically named in the policy. A no-frills policy provides very basic coverage for properties that do not meet an insurer s normal underwriting standards. 44 IBC Facts 2016

47 Premiums and claims In 2015, private P&C insurers wrote $10.2 billion in net written premiums for personal property insurance and paid out $5.5 billion for net claims incurred. Major issues - severe weather Climate change is disrupting lives and destroying homes, and is a growing concern for the industry. Over the past 60 years, the weather has become wetter, with a 12% average increase in rainfall across the country, making water damage rather than fire damage today s primary cause of home insurance losses. Compared to the 1950s, Canadians experience an additional 20 days of rain per year. The industry has identified adaptation to severe weather as a priority issue, and IBC has responded by developing a Natural Catastrophe Strategy for Canada. The strategy encourages the industry and federal government to collaborate on two risks flood and earthquake. The current gaps in private flood and earthquake insurance leave governments to pick up the tab for these natural catastrophes. A risk-sharing partnership with government is required for insurers to be able to offer affordable policies that protect the small percentage of Canadians who face the highest risk of earthquake and/or flood. The strategy promotes all levels of government working with the industry to improve Canada s resilience to natural catastrophes by updating flood mapping and investing in infrastructure and flood management. It promotes earthquakeproofing buildings and updating building codes. The strategy stresses that both the government and the industry need to educate citizens about the steps they can take to protect themselves from severe weather. During and after a severe weather event, IBC works closely with government officials and reaches out to consumers with advice and invite them to call IBC s toll-free Consumer Information Centre. Major issues - flood coverage This year for the first time, a few Canadian insurers began offering overland flood insurance to homeowners in specific areas. But at the moment, flood insurance is likely unaffordable for the 10% of homeowners who need it the most: those living on floodplains and in other areas at high risk of flooding. In these neighbourhoods, floods are a frequent, predictable event. Since insurance is designed to protect against random, unpredictable risks, it isn t designed for areas where flooding is a regular occurrence. IBC is calling for a national flood program built on a coordinated, private-public response to the growing problem of flooding. Canada s federal government is already paying for flood damage through the Disaster Financial Assistance Arrangements (DFAA) program. Since the 1970s, floods have been the DFAA s biggest draw, accounting for 70% to 80% of its spending. In the first four years of this decade, the DFAA program spent a staggering $3.7 billion on flood related expenses. In 2015, IBC published The Financial Management of Flood Risk, a review of flood insurance programs in the other G7 countries. It explores best practices and available models for addressing the economic impact of flood. It also draws out lessons for Canada s approach to the financial management of flood risk and the role of insurance. Canada is the only G7 country that doesn t have a national flood program in place. But Canada cannot copy another country s flood program and expect it to work in our vast nation. IBC is a leading voice advocating for a flood mitigation strategy. Much of the losses from flood can be attributed to aging public infrastructure. Canada s aging sewer and stormwater infrastructure simply cannot handle today s increased precipitation. Infrastructure improvements are essential for increasing the availability of overland flood insurance coverage. Governments made several encouraging announcements this year. In January 2015, the Public Safety Minister announced changes to the DFAA and Canada s national Disaster Mitigation Strategy that included $200 million for flood mitigation projects. In the fall, the new federal Liberal government was elected on a platform based, in part, on investing $5.6 billion over the next four years in green infrastructure, including flood mitigation systems. Also in the fall, Alberta s government released its first budget, which included $8.6 billion for municipal infrastructure. Canada s lack of effective flood risk maps, an essential riskassessment tool, is also limiting the industry s ability to provide residential flood insurance. IBC took a proactive approach to the problem and formed a partnership with several firms to develop the most comprehensive and detailed Canadian flood risk maps to date. The new maps rely on the best available local climatic and geospatial data, which was then used to build a new flood model tailored to the Canadian environment. The maps and model are state-of-the-art and current for every region of the country to support assessment of flood risk. IBC Facts

48 The maps are crucial for underwriting but can also help governments and other stakeholders. Governments can use this information for urban planning and zoning purposes. They can also use it to target investment in infrastructure and risk mitigation projects where they generate the highest return on investment. Provinces and municipalities can make use of these maps as they consider the flood risk to infrastructure. IBC continues to advocate to the government, urging it to help create a robust culture of flood risk management in Canada. At the same time, we re preparing imaginative solutions to help communities manage excess water. In 2009, IBC began developing the municipal risk assessment tool (MRAT) to help communities identify at-risk sewer and stormwater infrastructure, allowing them to prioritize their infrastructure investments. IBC continues to receive positive feedback from the three pilot municipalities that employed the semi-automated statistical tool. Now IBC is taking steps to have MRAT fully automated, operationalized and distributed across Canada. To move ahead, IBC went back in time to study how oldfashioned rain barrels can help communities address modernday climate change. In September, IBC released the results of its study in Stratford, P.E.I., where extreme weather events have flooded roads and basements. For the study, IBC distributed close to 1,000 rain barrels to families, who installed the barrels under their homes roof downspouts to capture water during rainstorms. After a year, the barrels had the potential to reduce the flow rate to the treatment plant by as much as 4.5%, enough to prevent the stormwater system from overflowing. IBC has since launched a similar initiative in Cornwall, P.E.I. IBC continues to take a leadership approach in furthering the dialogue on Canada s earthquake risk. In British Columbia, IBC took the Quake Cottage, an earthquake simulator, to highrisk communities to encourage the residents to prepare for a potential quake. Also, IBC continues to help sponsor the annual Great British Columbia ShakeOut. Launched in 2011 with 470,000 participants, the ShakeOut event this year saw a record 785,000 British Columbians go through the earthquake drill. In addition, IBC petitions the government for help in educating consumers to create a culture of earthquake preparedness. This advocacy work has produced promising results. In March, the B.C. government released its Earthquake Preparedness Consultation Report, which recommends that the provincial and federal governments engage with the insurance industry and other stakeholders to develop a strategy on disaster resilience and increase public awareness of the need to prepare. IBC is continuing the national dialogue on earthquake preparedness that it initiated at its Vancouver symposium in There is an active seismic region in Quebec, and in November 2015 IBC hosted a symposium on earthquake preparedness in Montreal. It focused on the physical and economic impact of a major quake in the province, and stressed the need to prepare by developing emergency plans and ensuring that buildings meet seismic requirements. IBC stressed its consumer education mandate. In Quebec, the population is generally not well informed about earthquake risk. An IBC survey found that 25% of policyholders in Quebec believed they were covered for an earthquake, when in fact only 3% actually were. Major issues - earthquakes Many consumers in need of earthquake insurance do not buy it, or falsely believe that quake damage will be covered by their basic home insurance policy, or that the government will pay to rebuild their homes. Over the last decade, some insurance companies have stopped providing earthquake insurance or have placed limits on coverage because of higher capital requirements from regulators and improved risk assessment. For example, in British Columbia, where it has been established that there s a 30% chance of a destructive earthquake within the next 50 years, consumers face deductibles as high as 15% of the value of their home. 46 IBC Facts 2016

49 Business insurance Operating a business comes with an element of risk and unpredictability. Businesses, including non-profit organizations such as charities, buy insurance as part of an effective risk management plan. In larger enterprises, risk managers evaluate any perils to the business, implement programs to reduce and manage those dangers, and buy insurance to backstop remaining exposures. Smaller businesses without the benefit of risk managers depend more on the advice of insurance representatives to identify risks and help them choose the appropriate insurance to guard against potential losses. Much like any other business, home-based businesses require coverage for possible business-related losses. For example, a home-based business owner may require commercial liability coverage since business risks may not be covered by the liability section of a home insurance policy. Types of coverage There are various types of business insurance policies: Commercial general liability covers a business and its employees for actions against them that result in bodily injury, property damage, personal injury, advertising injury, tenant s legal liability, and other types of loss or damage to third parties. Commercial property insurance is designed to protect the physical assets of a business against loss or damage from a broad range of causes. Physical assets include: - Equipment - Inventory and supplies - Office furniture and fixtures - Computers and electronics - Personal property of employees while on-site - Customer property at your business site - Lighting systems - Windows - Outdoor signs Directors and officers insurance covers directors and officers of organizations for actual or alleged errors, errors or omissions, breach of duty, misleading statements and neglect in carrying out their responsibilities for the organization. Errors and omissions or professional liability insurance covers individuals and organizations who give professional advice (for example, consultants and financial planners). It protects them if clients claim damages as a result of inaccurate advice, misrepresentation, negligence, or violation of good faith and fair dealing. Business interruption insurance can cover against lost earnings during the period of a shutdown due to an event such as a fire or riot. It can cover the time the business needs to resume profitability. Some business owners buy additional insurance to cover extra operating expenses for example, a new telephone system, extra advertising costs, rentals and moving costs if the business must carry on at another location or outsource work during the shutdown. IBC Facts

50 Premiums and claims In 2015, private P&C insurers wrote $6.7 billion in net written premiums for commercial property insurance and paid out $3.8 billion in net claims incurred. Also in 2015, private P&C insurers wrote $5.0 billion in net written premiums for commercial liability insurance and paid out $3.1 billion in net claims incurred. Major issues - cyber liability While insurance for cyber liability risk is relatively new, it s developing quickly in response to the need of businesses that engage in e-commerce and/or maintain electronic records containing customers personal information. Recent changes to Canadian privacy laws have increased the potential costs associated with a security or privacy breach. Over the past few years, hackers have exposed millions of people s private information, costing millions of dollars to the companies involved. Cyber liability coverage addresses the risks associated with e-business, in particular the risks associated with responding to a security or privacy breach that may impair internal business operations as well as cause losses for the owners of compromised personal information. In addition, cyber liability coverage may address risks associated with copyright infringement and losses resulting from computer viruses being introduced into business computer systems or networks. There is no standard cyber liability policy, and the scope, terms and conditions of each policy may vary from company to company. Major issues - cargo theft Stealing trucks and transport trailers and then offloading the cargo to sell for a quick profit is big business in Canada. Each year, cargo theft costs the Canadian economy about $5 billion. IBC leads a cargo theft reporting and recovery program with the Canadian Trucking Alliance. Launched in Ontario and Quebec in 2014, it brings together the insurance industry, the trucking community, law enforcement and other stakeholders to assist in the recovery of stolen goods and to raise awareness of the costs associated with this crime. Since its launch, the initiative has received more than 800 reports of cargo-related thefts, resulting in over $12 million in recoveries of stolen goods since March In 2015, the program became national when it was launched in Atlantic and Western Canada with the cooperation of law enforcement and the provincial trucking associations. In December 2015, IBC launched its database electronically to allow law enforcement from across Canada to access the stolen goods registry 24/7. Major issues - preparing for natural catastrophes and climate change IBC encourages businesses to have business-continuity and disaster-recovery plans. It also promotes minimizing risks by installing fire alarms, identifying cyber risks and having a backup power source. Large natural disasters have a profoundly negative impact on economic conditions. Typically, a disaster lowers economic growth by around one percentage point and GDP by about 2%. 48 IBC Facts 2016

51 Insurance organizations 50 IBC members 55 IBC offices 56 IBC services 57 Superintendents of insurance 59 Insurance-related organizations 3 IBC Facts