P.E.I. w wick Nova Scotia Toward a Safer Nova Scotia An update from Nova Scotia s home, car and business insurers
The year 2013 posed a tremendous challenge to Canadians from coast to coast with catastrophic floods in Alberta and Ontario, a deadly train derailment in Quebec and an ice storm that left many in Ontario and Atlantic Canada without power. The property and casualty (P&C) insurance industry responded quickly to help people recover from these events. Insurance Bureau of Canada (IBC) the voice of the P&C insurance industry takes its leadership role seriously in making communities more resilient. To advance our work, we collaborate with federal, provincial and municipal governments and other stakeholders. The launch of IBC s municipal risk assessment tool (MRAT) and an IBCcommissioned earthquake impact study are examples of the industry s efforts to help Canadians prepare for the biggest risks they face. Beyond managing risk, providing peace of mind and paying billions of dollars in claims, the P&C insurance industry employs tens of thousands of Canadians and promotes economic development. The industry also advocates for improvements in financial literacy, emergency preparedness and severe weather adaptation. We take pride in sharing in the collective responsibility to keep people safe, whether they are at home or on the road. Amanda Dean Vice-President, Atlantic This publication provides a summary of our efforts to help build a stronger, safer Nova Scotia. 2
Car insurance is working in Nova Scotia Over the last decade, Nova Scotians have benefited from affordable, effective car insurance. Since the government introduced reforms in 2003, average premium costs have dropped 26% from $1,069 in August 2003 to $788 in October 2013. Today, Nova Scotians enjoy some of the lowest car insurance rates in the country. In 2013, the provincial government successfully completed a two-year, multi-phase reform of car insurance. (This followed the 2010 changes to the minor injury general damages cap.) The changes increase the amount of benefits and compensation available to people injured in collisions, simplify the claims process and provide more effective rehabilitative care. These improvements help everyone on Nova Scotia s roads. IBC and the private insurers serving Nova Scotia are pleased to continue to work alongside the government to ensure smooth implementation of the reforms. As it stands today, car insurance is a wellbalanced product, providing good benefits and a stable cost structure for customers. In any reform process, there is always some uncertainty about the true impact of the changes, because it often takes years to fully understand their effects. IBC and insurers will work closely with the government to monitor the effects of the reforms, address any unforeseen issues and help keep the system working well for Nova Scotians. Nova Scotia - Average auto premiums 2003-2013* $1,100 $1,069 $1,000-26.3% $900 $800 $788 $700 AUG. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 OCT. 2013 *average written premium by entry month ($) Source: IBC, GISA 3
Adapting to Severe Weather and Natural Disasters Severe weather took a devastating toll on Canadians in 2013. After each crisis, the insurance industry worked quickly to process and settle claims to help people recover. All told, the industry paid out a record-breaking $3.2 billion to policyholders in 2013 for losses related to severe weather the highest amount in Canadian history. To help Canadians build resilience in the face of natural disasters, the P&C insurance industry focuses on preparing before a crisis as well as responding afterward. In 2013, the industry achieved two milestones in collaboration with federal, provincial and municipal governments and took other proactive steps to cultivate and maintain relationships with governments at all levels: IBC launched MRAT, a new ground-breaking technology, to help municipalities identify sewer and stormwater infrastructure vulnerabilities that could result in sewer backups and basement flooding. Municipalities will use the MRAT information to plan and prioritize infrastructure repairs. The city of Halifax continues to collaborate with IBC in developing MRAT, and Fredericton, NB, is one of the three MRAT pilot cities. IBC released a scientific study on the economic impact of a major earthquake in British Columbia and the Quebec City-Montreal-Ottawa corridor. An earthquake in either of these regions would have major economic implications for Atlantic Canada. IBC along with the P&C insurance industry is dedicated to working closely with governments and other stakeholders toward the development of a national response framework. In November, IBC Atlantic Vice-President Amanda Dean addressed attendees of the Red Cross Conference on Disaster Management and the fall conference of the Union of Nova Scotia Municipalities, which were both held in Halifax. She focused on strong partnerships and the role the P&C insurance industry has to play in disaster management. 4
Whether it s hurricanes, rainstorms or ice storms, Nova Scotians are increasingly under siege from severe weather and the damage it inflicts. The P&C insurance industry has a front row seat on the effects of our changing climate. Along with assisting to rebuild in the wake of disaster, the industry plays an active role in helping Nova Scotians protect themselves, their families and their property in the face of severe weather. During hurricane season in the Atlantic, as well as in advance of winter storms, IBC issued media releases that explained how to stay safe, how to prevent property damage and what typical insurance policies would cover if damage did occur. The releases also offered advice about starting the claims process and encouraged people to call IBC s Consumer Information Centre toll-free for insurance assistance. In 2013, IBC deployed its virtual CAMP (Community Assistance Mobile Pavilion) program to respond to nine severe weather events in Atlantic Canada, including flooding in Digby, NS, a tornado near Grand Lake, NB, and a forest fire in Wabush, NL. IBC worked with local governments, emergency management personnel, media and insurers to disseminate important insurance and safety information via traditional and digital media. Photo credit: Terry Small Digby residents were inundated following heavy rains in July 2013. 5
Empowering Consumers When Canadians know how their insurance works and have the right coverage, they can better protect themselves, their families and their property. IBC is committed to being a trusted source of insurance information. Here are some of our efforts in 2013 to help Canadians understand their insurance: Answered more than 66,000 inquiries at five consumer information centres across the country Issued 86 media releases and generated 9,599 articles Made effective use of social media, resulting in more than 37 million Twitter impressions and over 1 million visits to ibc.ca and getintheknow.ibc.ca Responded to 884 media calls and participated in 124 events, speaking engagements and sponsorships Used both traditional and social media to promote timely reminders about severe weather preparedness, water damage prevention, winter driving, insurance literacy, how to fight fraud and more Partnered with police forces and other organizations across the country, such as Crime Stoppers, to fight fraud and other insurance crimes. Insurance outreach: IBC is an important insurance resource for consumers and media. Here IBC Atlantic VP Amanda Dean speaks with Global News. 6
Keeping Communities Safe The P&C insurance industry is committed to building strong communities and working with like-minded partners to ensure the Atlantic region is resilient and thriving. Some examples of the industry s work in 2013 include the following: RED CROSS CONFERENCE ON DISASTER MANAGEMENT IBC was a platinum sponsor of the annual Canadian Red Cross Conference on Disaster Management held in Halifax from November 18 to 20, 2013. IBC Atlantic VP Amanda Dean was one of three participants in the Recovery Planning/Risk Management for Disaster panel, which discussed gaps in coverage and realities of insurance and government assistance in the face of catastrophes. PATNET In 2013, IBC launched the Provincial Auto Theft Network (PATNET) in Nova Scotia. Co-founded in 2010 by IBC and the Saint John Police Force in New Brunswick, PATNET connects police officers across the province with IBC s auto theft and fraud investigators. Through improved information sharing and specialized training sessions on auto theft issues, PATNET is helping the Atlantic police community fight auto theft and insurance crime in the region. Amanda Dean speaks at the Red Cross disaster management conference in Halifax. Nova Scotia police officers attended the PATNET Basic Vehicle Identification training seminar in Truro, NS, in September. The training session focused on vehicle identification and theft investigations. 7
Insurance 101 When people buy insurance policies, they put money into a pool to help the few who will suffer a financial hardship such as a house fire, car collision or business interruption in a given year. A premium is based on how likely it is that the purchaser will collect from the pool by making a claim. Insurers gather information that they know from experience will help them produce fair and accurate rates. Ask your insurance representative about your policies at least once a year. Did you know? Both federal and provincial governments closely regulate the insurance industry. Provincial governments oversee and must approve car insurance rates and coverages. Questions to ask your insurance representative: HOME CAR BUSINESS What does my policy cover? What are the limits? Are there any exclusions? Is there a specific kind of insurance for a house? A condo? An apartment? Are there risks for which I can t buy insurance? Is optional coverage available for risks not normally included in a regular policy? What can I do to keep my premiums down? What does my policy cover if I m involved in a collision? What optional coverage is available? Should I have collision insurance on an older car? What deductible amount is recommended? What can I do to keep my premiums down? What kind of insurance do I need? Are there perils for which I can t buy insurance? If my business is homebased, do I need special coverage? What does errors and omissions or malpractice insurance cover? What can I do to keep my premiums down? 8
Demystifying Insurance Despite the importance of insurance to their financial security, consumers are often unsure about what a premium represents and how it is calculated. Here are some factors that help insurers set premiums. car insurance: Claims history of policyholder Driving record of policyholder and other household drivers (at-fault collisions, moving violations, etc.) Vehicle type (make, model, year, etc.) Vehicle repair cost and/or replacement value Collision and crime rates where vehicle is usually parked Driving distance and frequency Additional coverage, deductible and discounts. Discounts may be offered for: Vehicles with loss prevention devices Drivers who have graduated from approved driver training courses Insuring two or more private passenger vehicles in the same household Combined coverage for existing insured clients (for example, car and home insurance) home insurance: Age, size and location of residence Type and quality of finishes and materials Residence replacement cost Residence type (single-family dwelling, apartment, etc.) Residence construction material used (brick, cement, etc.) Distance from fire hydrant and fire station Claims history of policyholder Crime rates of residence location Additional coverage, deductible and discounts. Policyholders who have never filed an insurance claim Drivers over the age of 55 Vehicles not used in winter Loyalty for policy renewals by existing insured clients, subject to insurer s criteria. 9
Contributing to the Economy The P&C insurance industry plays a vital role in Canada s economic health. By absorbing financial risk, particularly in a world of emerging new risks and changing needs, and investing in Canadian bonds and securities, insurers help to create and promote growth, development and employment. Here are highlights based on the most recent data available: The P&C insurance industry employed 118,600 people across Canada. The P&C insurance industry had $104 billion in invested assets, to support economic growth and stability. Insurers paid out $27.8 billion in claims to victims of collisions, disasters and other losses in Canada. Canadian insurers paid more than $7.5 billion in taxes and levies to federal and provincial governments. Health care levy: In 2012, the P&C insurance industry paid $13.8 million in health care levies to help pay for the medical needs of collision victims in the province. Supporting Nova Scotia: There are more than 100 home, car and business insurance companies serving the province of Nova Scotia. Taxes: In 2011, the P&C insurance industry paid $95.8 million in taxes to the government of Nova Scotia. Claims: In 2012, insurers paid out $594 million in claims to help policyholders in Nova Scotia recover from injuries and rebuild damaged property. 10 Source: IBC with data from MSA, SCOR, AMF
Investing Wisely The P&C insurance industry offers the key service of risk management and is committed to covering losses when they occur. Providing these services necessitates the careful and safe investment of resources to ensure that funds are available when needed. With the bulk of its investment portfolio in federal, provincial and municipal bonds, the insurance industry is far less vulnerable to stock market fluctuations than other industries. This is also why P&C insurers historically weather an economic crisis better than others in the financial services sector. BREAKDOWN OF NATIONAL P&C INSURANCE INDUSTRY INVESTMENTS WHERE DOes each dollar received by insurers GO? The Insurance Dollar pie chart shows how Canada s home, car and business insurers spent each dollar of revenue averaged over the seven years from 2006 to 2012. 80.7% Bonds 12.7% Shares 3.8% Term deposits 2.1% Other investments 0.7% Mortgage loans Source: IBC, MSA, SCOR, AMF 54.0 Claims paid out to policyholders 20.5 Operating costs 16.1 Taxes and levies 9.4 Profit margin Source: IBC, MSA 11
Questions? We re here. Insurance Bureau of Canada s Consumer Information Centre Tel: 902-429-2730 Toll-free: 1-800-565-7189 ext. 228 Hours: M-F 8:30 a.m. 4:30 p.m. or visit ibc.ca For additional copies of this booklet, please contact: Insurance Bureau of Canada s Member Services memberservices@ibc.ca Insurance Bureau of Canada is the national industry association representing Canada s private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. Data in 2014 State of the Industry brochure have been gathered from several national and international sources, including IBC. Data are from 2011, 2012 or 2013 depending on when sources release 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 may be small differences among similar data. 02/2014