26 July 2018 07:00
Denis Ricard | Photo : Denis Méthot
iA financial Group knows of the difficult years in the property and casualty insurance. The growth of premiums, however, is waiting for you.
The direct premiums written in auto and home insurance have reached 308,8 M$ in 2017, representing a growth of 11% compared to 2016. According to the annual report of ai, the business volume of the sector grew annually by 9 % during the past four years, compared to a 3% rate in the industry during this period.
Home and auto insurance, however, registered losses in the last three years. In 2017, this sector has suffered a loss of $ 6.3 million ($M), «due to the high claims rate and drain financial associated with the high growth,» the report says. The combined rate of this sector amounted to 103,9 %, which was 76.6% of the resulting claims.
«Insurance is a cyclical industry,» says Denis Ricard, chief operating officer of iA Group financial. We have had many years where Quebec was the place to be, amazing years. The rate of claims declined because of the prevention and the vehicles became safer. There has been a decrease in claims and a drop in prices significant in Quebec, year after year. «
The situation has changed in the past two years, » said Mr. Ricard. «The frequency of claims and severity per claim have increased,» he said. It is a phenomenon of the industry. «
Despite the technology that is added to vehicles, the frequency undergoes the influence of phenomena, such as texting at the wheel. The weather in this cocktail, » said Mr. Ricard. According to him, the technology also explains that the bumper which cost $ 1,200 to repair the time is now 4 000 $, because of the sensors and radars that are integrated.
Auto loans report
iA is a trade-mark to develop niche fairly unoccupied. Four years ago, the insurer has made its entry as a lender in the automotive sector, providing automotive loans at preferential interest rates and loans to non-preferential.
The issuance of loans to non-preferred has experienced strong growth. On the other hand, ai has stopped issuing loans at a preferential rate at the beginning of 2017, which has led to a decline in total emissions of loans. «It was extremely difficult to achieve a return on equity to be satisfactory with this range of loans, because we were in competition with all of the canadian banks and the Caisses populaires Desjardins, all these to dealers. We couldn’t have a volume that is interesting, » said the chief operating officer of iA, Denis Ricard.
Loans non-preferred are not on all loans issued. «We have issued nearly $ 600 million in auto loans since the beginning of our activities in this area, including$ 400 Million in loans to non-preferential, so that the portion of the concessional loans will go descending «, revealed Mr. Ricard.