15 August 2017 07:00
It sells for less than insurance policies from replacement in Quebec. Another finding : the market share of automotive dealers declined in favour of the representatives certified.
TheAuthority of the financial markets unveils every year the results of sales of replacement insurance in Quebec in its annual Report on the financial institutions. And the edition 2016 of this report made mention that it sold 10 000 fonts replacement insurance less in 2016 than in 2015.
The insurance market of replacement remains «largely dominated» by the companies using the mode of distribution without a representative, in this case, the auto dealers, says the Authority. These cookies collect 72 % of the total policies sold in 2016 and 80.7% of the total premiums written. In comparison, these proportions were 79.5 % and 86.6 %, respectively, in 2015.
In total, by 2016, nearly 99 000 fonts have been subscribed, and this, more than 161 million dollars ($M) in premiums compared to 109 000 fonts and 185 M$ of premiums in 2015. Insurers distributing this insurance policy through representatives certified, such as brokers, dealers or agents, have subscribed for 28 % of total policies sold in 2016, compared to 20.5% in 2015, and hold 19.3% of the total written premiums, compared to 13.4% in 2015.
The Authority reveals that consumers tend to opt for a term of five years if they buy replacement insurance, and this, regardless of the mode of distribution. They represent 39 % of policies underwritten in 2016.
3rd year down for the dealers, 4th up to the brokers
The regulator also notes that the number of policies written premiums written decreased for the past three years. In 2016, the total number of policies written has declined 17.8 %, while premiums written decreased by 19 %.
«These decreases are primarily attributable to the declines observed on the side of automobile dealerships. In 2016, the auto dealers show declines of 28 % of the number of policies sold and 26% in the level of premiums written. However, despite these decreases in the market of replacement insurance, the brokers/agents have increases for a fourth consecutive year. In 2016, they have increased to 29.1%, their number of policies sold and 33.9 % of their direct written premiums, » says.
Average premium : difference of $703 per
As to the difference between the average written premium for the two modes of distribution, it remains higher at the car dealership. In 2016, this gap is 703 $, or 62 %, between the two modes of distribution, while it was $ 725 in 2015, accounting for 66 %.
«The gap has narrowed in 2016 since the average written premium of insurers doing business with auto dealerships fell 0.2 % compared to 2015, while that of insurers distributing the font through representatives certified has increased by 1.7 %. This variance is notably explained by the commission rate, which is higher for the distribution without a representative. The average written premium, including all terms of the available fonts, is 1 $ 829 for the network of distribution without a representative, and 1 126 $ when it is underwritten by a certified representative, » says the Authority.