15 August 2017 07:00
Photo : Freepik
In 2006, Québec had 311 insurers. Ten years later, in 2016, there are 257. The decline is most marked in life insurance, where the sector has lost 30 % of its players.
This is a decline of 17.4 %, says thefinancial markets Authority, in its annual Report on the financial institutions to 2016, published in mid-June. This figure accounts for both insurers and property and casualty insurers. As of December 31, 2016, Quebec had 87 insurers and 165 property and casualty insurers, as well as five other insurers that operate in the two segments.
Lesser decline in property-CASUALTY insurance
Ten years earlier, at 31 December 2006, Québec had 124 insurers. There are, therefore, 37 of less, a decline of almost 30 %. In damage insurance, the decrease is of 18 insurers for the same period, a decrease of 10 %.
This decline in the number of insurers, however, did not transgress the growth of the industry. Thus, the premiums written by direct insurers increased 64.9% from 2006 to 2016, rising from $ 9.7 billion (G$) to$ 16 billion. In damage insurance, the increase is 32.4 %, from $ 7.1 Billion$ 9.4 billion$ over the same decade.
The number of financial service cooperatives has experienced a more marked decrease in the number of insurers. In ten years, the decline of 42.8 %. Their number increased from 530 in 2006 to 303 in 2016.
As to the number of trust companies remained stable from 37 to 36. Same thing for the number of companies savings, from 7 to 8.
The investments in the fintechs on the rise
The Authority also echoes in his report to a study by EY and Finance Montréal, which shows the increase in the funding of fintechs in the world. From 2012 to 2014, these investments went from $ 139 million ($M) in 2012 and have reached$ 225 Million in 2014. A year later, they have tripled. They have reached 695 Million$ in 2015.
Quebec is not at rest, EY and Finance Montréal believe that investments in the fintechs in Québec were of the order of$ 46 Million in 2014. In 2015, this amount was$106 Million.
This rise raises, however, some fears on the part of financial institutions. The Authority cited in his report a study of 2016 PricewaterhouseCoopers (PwC), which has probed several insurers and several banks to know the impact that they will have fintechs on the traditional financial sector by 2020.
One thus finds 83 % of financial institutions surveyed that believe that a portion of their activities will be affected. This proportion rises to 95 % among the banks.
These same financial institutions estimate that 23% of their market share may be lost to the fintechs. This proportion is 2% in the insurers.
The life insurers in quebec to improve their net profit
The Authority has also made the point about the net income recorded by the life insurance industry in 2016. After having experienced a decrease of$ 2.1 billion or 15.7 % from 2014 to 2015, the total profits have more than regained the ground lost from 2015 to 2016, with an increase of$ 2.3 billion or 20.8 %. «The rise in interest rates over the long term, as well as the good performance of the stock markets have certainly contributed to these results,» says the regulator.
The Authority also mentions that the rise in the rate of government of Canada bond yields has helped the insurers. «The interest rate in the long term have a direct impact on the yield realized on new investments in addition to have an impact on the assumption of the reinvestment rate used for the valuation of policy liabilities. The higher rates observed in 2016 has therefore been welcomed by the insurers, » one can read it in its annual Report on financial institutions in 2016.