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IBC educating stakeholders about impact of inflation on P&C lines

With inflation being at levels not seen in 30 years and affecting every aspect of day-to-day life, IBC has developed a multi-phased outreach and communications strategy. The strategy focuses on educating governments, regulators, stakeholders and consumers on the impact that inflation and supply chain disruptions are having on the insurance industry and claims costs across auto, property and commercial insurance lines. IBC developed the strategy in collaboration with the Personal Lines Standing Committee and Commercial Lines Standing Committee.

For more information, contact:

Celyeste Power
Executive Vice-President, Strategic Initiatives and Advocacy
CPower@ibc.ca

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2022 First-Quarter Financial Results

In the first three months of 2022, the Canadian property and casualty (P&C) insurance industry reported a $512 million decline in net income despite positive underwriting results. The decline was largely attributed to an $894 million decline in the industry's investment performance owing to the spike in interest rates in March 2022. Although this spike had a positive impact on underwriting results through higher discounting of incurred claims, it was countered by pervasive inflation and increasing claims associated with the return to normal economic activity following the relaxing of COVID-19 health restrictions.

The last section of this report, "Spotlight on Inflation," highlights the inflationary pressures on property and auto insurance claims. Overall, the annualized ROE declined to 13.4% in Q1 2022 from 19.6% a year prior.

Click here for IBC's detailed analysis of the 2022 first-quarter financial data released by MSA Research Inc. This analysis concisely reviews the performance of the Canadian P&C insurance industry, and the associated data informs many of IBC's government relations efforts across the country.

For more information, contact:

Sarah Fong
Assistant Chief Economist and Head of Industry Data, Policy Development
SFong@ibc.ca

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May 21 severe storm ranks 6th largest insured loss event in Canadian history

On Saturday, May 21, a destructive, deadly storm swept through southern Ontario and parts of Quebec, causing over $875 million in insured damage, according to initial estimates from Catastrophe Indices and Quantification Inc. (CatIQ). This severe weather event resulted in the tragic loss of lives and widespread destruction to property and public infrastructure.

IBC staff immediately liaised with officials from all levels of government in affected communities and deployed its virtual Community Assistance Mobile Pavilion (CAMP) to assist affected residents. On May 30, IBC deployed its physical CAMP to Ottawa for two days with IBC staff on-site at local Community Support Centres to answer residents' insurance questions. 

At the request of members, IBC issued the Canada Immigration letter to facilitate cross-border adjuster mobility. On May 31, the Financial Services Regulatory Authority of Ontario loosened the adjuster licensing inter-provincial requirements to facilitate the use of adjusters of affiliated insurers from other jurisdictions to process claims related to this weather event in Ontario.

The staff of the IBC Consumer Information Centre continue to stand ready to help residents who require assistance and/or have questions about insurance-related matters.

IBC continues to monitor this situation, and the virtual CAMP remains active. IBC is also active on social media and is responding to media requests.

For more information, contact:

Kim Donaldson
Vice-President, Ontario
KDonaldson@ibc.ca

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Insured losses from 2021 floods in BC now $675 million

The devastating floods in southern British Columbia last fall are now estimated to have caused $675 million in insured damage, according to new estimates from Catastrophe Indices and Quantification Inc. (CatIQ). The previous insured loss estimate was $515 million.

While the estimated insured damage due to the November floods has grown, the majority of the increased loss – and of total insured losses overall – are due to business claims where commercial insurance is more readily available. In contrast, many affected residents were located in high-risk flood areas and floodplains where residential flood insurance coverage is not available. As a result, it is expected that the cost to all levels of government from these events will total well into the billions of dollars.

To that end, IBC has been leading conversations with the federal and provincial governments on ways to improve the resiliency of communities moving forward and better manage the costs of flooding for high-risk residential properties in Canada. As a member of the federal, provincial and territorial Task Force on Flood Insurance and Relocation, IBC has put forth options to create a residential flood insurance program – including a public-private partnership model – that would help make affordable insurance available to residents of high-risk areas. These recent floods are a reminder of the urgency with which we must move forward in those discussions.   

IBC is committed to working closely with the private sector, first responders and governments to improve Canada's preparedness for and resilience to severe weather events.

For more information, contact:

Aaron Sutherland

Vice-President, Western Canada
ASutherland@ibc.ca

Craig Stewart
Vice-President, Climate Change and Federal Issues
CStewart@ibc.ca

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UCP leadership race taking shape

In the wake of Premier Jason Kenney's resignation on May 17, a number of candidates have tossed their hats into the ring for the upcoming leadership race of the United Conservative Party (UCP). Kenney announced he would step down after receiving a 51.4% approval rating by party members in his leadership review.

Three of the early favourites to replace Kenney are Brian Jean and Danielle Smith, both former leaders of the now-defunct Wildrose Party, and former Finance Minister Travis Toews, who recently resigned his cabinet post after announcing his intention to seek the leadership. Several other candidates are testing the waters behind the scenes. They include Transportation Minister Rajan Sawhney and Children's Services Minister Rebecca Shultz, both from Calgary, which will be a key battleground in the next provincial election.

IBC has positive relationships with all of these candidates and will be well-positioned to engage the eventual winner in the lead-up to the election, which must be held by May 29, 2023. The UPC recently announced that the next leader and premier of Alberta will be elected on October 6.

For more information, contact:

Aaron Sutherland
Vice-President, Western Canada
ASutherland@ibc.ca

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Lytton wildfire recovery update

As we approach the one-year anniversary of the Lytton wildfire, the village has passed a Memorandum of Understanding (MoU) and a trust as the best path forward to avoid continued delays in debris removal of insured properties. While this is not the preferred approach for our industry, it appears that there is broad agreement by all stakeholders on the need to move forward as expediently as possible for the benefit of customers and the industry's reputation.

The principle of the MoU is that an insurer would provide their debris removal insurance portion (up to the policy limit, or up to the limit they are prepared to pay) into the trust, and the village's contractor – Matcon – would do the work on-site. Village officials confirmed that the Government of British Columbia will be covering debris removal costs that are outside the scope of insurance.

With debris removal having already started for municipal and uninsured properties, IBC is keen to do all it can to support debris removal for insured properties as well. We were recently made aware that First Nations archeological artifacts have been found on municipal properties, but to date these discoveries have not caused any additional delays.

For more information, contact:

Aaron Sutherland
Vice-President, Western Canada
ASutherland@ibc.ca

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Finance

Federal announcement on taxation of P&C insurance contracts under IFRS 17

Tax measures in the 2022 Federal Budget proposed maintaining the current tax treatment for P&C insurance contracts when IFRS 17 is adopted. IBC's Tax Working Group successfully advocated to maintain the current practice of reversing accounting reserves and applying the Income Tax Act to a company's accounting income to determine the taxable income under IFRS 17.

The details are pending, with certain modifications to the legislation expected this summer, however, this is an overall positive outcome for P&C insurers. IBC's Tax Working Group continues to engage with the Department of Finance Canada and the Canada Revenue Agency to ensure that the proposed IFRS 17 tax legislation is fair and administratively efficient for P&C insurance contracts.

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IBC's IFRS 17 Reinsurance Working Group's position paper

In preparation for the adoption of IFRS 17 in Canada, now only six months away on January 1, 2023, IBC's IFRS 17 Reinsurance Working Group analyzed the incoming requirements related to reinsurance contracts held (also known as ceded contracts) and the measurement of reinsured loss recoveries.

The practical approaches related to accounting for reinsurance under IFRS 17 discussed by the working group were consolidated into IBC's IFRS 17 reinsurance position paper that can be accessed here. Additionally, the paper includes six numerical examples of calculating loss recoveries under reinsurance contracts held.

IBC invites members to visit its member site to access the IFRS 17 reinsurance position paper and other position papers on various IFRS 17 topics.

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Members' input welcomed regarding industry response to OSFI's 2022–23 consultations

On April 21, the Office of the Superintendent of Financial Institutions (OSFI) released its Annual Risk Outlook, which outlines the most pressing risks under consideration and the near-term plan of guidance priorities for federally regulated financial institutions.

IBC continues to respond to OSFI's 2022–2023 planned guidance releases, but it is difficult to strike the right balance between implementing pressing prudential guidance and responding in a timely manner to the various OSFI consultations given the resources required to analyze the broad and permanent implications of any new or revised guidance. Some of our recent strategies include:

  • IBC's response to OSFI's Culture Risk Management industry letter stated that a standalone Culture Risk Management guideline is unnecessary.
  • IBC recommended that OSFI revise its proposed timelines for implementation of the draft "Assurance on Capital, Leverage and Liquidity Returns" guideline.

In addition, IBC asked OSFI to stagger the various planned stakeholder consultations and postpone implementing certain guidelines given the number of operational priorities and strain on insurer resources.

IBC is turning to its members to bolster its working groups. If you are interested in joining any of IBC's various working groups to continue to analyze OSFI's planned policy releases, please contact Sarah Fong (details below). Joining an industry working group can be an excellent way to expand your knowledge and professional network.

For more information, contact:

Sarah Fong
Assistant Chief Economist and Head of Industry Data, Policy Development
SFong@ibc.ca

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Retail sales tax (RST) on insurance premiums in Newfoundland and Labrador

On April 7, the Newfoundland and Labrador government announced that, as part of its 2022 budget, the RST will be removed from personal property premiums for one year effective immediately. The initiative is running from April 7, 2022, to April 6, 2023.

On behalf of members, IBC's Tax Panel submitted questions to the government to seek clarity on implementing the change so it can be achieved in a timely, cost-effective manner. IBC developed an FAQ document in conjunction with the Newfoundland and Labrador government to provide guidance to members on the RST exemption. This document has been shared with IBC members, Newfoundland brokers and direct relationship insurers.

For more information, contact:

Amanda Dean
Vice-President, Atlantic
ADean@ibc.ca

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Legal Bulletins & Advisory Wordings

Recent legal bulletins that comment on matters that affect the P&C insurance industry

For more information, contact:

Mario Fiorino
Vice-President, Legal & General Counsel
MFiorino@ibc.ca

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Membership Updates

Member engagement update: New appointments to IBC committees and advisory groups

On May 22, IBC's Governance Improvement Committee (GIC) made the following new appointments:

Commercial Lines Standing Committee: Karen Lemire, Gore Mutual

Personal Lines Standing Committee: Chad Shurnaik, Peace Hills; Isabelle Blackburn, Industrial Alliance

Ontario Regional Committee: David Tran, Zurich Canada

CLEAR Advisory Group: Jean-Francois Bolduc, Industrial Alliance

HCAI Advisory Group: Erin Warry, Chair, Wawanesa

Wordings Advisory Group: Christopher Scotchmer, Zurich Canada; Nara Moon, Liberty Mutual; Linda Liu, Gore Mutual

For more information, including how to get involved, please contact:

Bansri Tilva
Manager, Member Engagement
BTilva@ibc.ca

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Commercial

New TSSEA regulations

IBC continues to consult with the Ontario government on Towing and Storage Safety and Enforcement Act (TSSEA) implementation. On March 2, the Ontario Ministry of Transportation (MTO) provided a summary of proposed regulations for the TSSEA. The Act was passed in June 2021 but will not come into force until the supporting regulatory framework has been established. The regulatory summary focused on licensing and certification requirements for tow and storage operators. IBC, through its Towing and Storage Working Group (TSWG), submitted a response on April 1 that contained 15 recommendations to improve the system and close gaps for better consumer protection. On April 21, the government filed and published the first tranche of detailed regulations to establish a provincial certification system. The substantive regulation can be found here: TSSEA Regulation 417/22 - General. MTO expects it will be operational on July 1, 2023.

The regulation contains many positive developments that indicate the government listened to IBC and industry recommendations during the consultation; for example, the list of precluding offences is wide and should filter out those that pose the greatest public safety and fraud threats. The regulations also authorize the director to collect information from other public bodies to administer the TSSEA, including to make licensing and enforcement decisions. This follows IBC's request to establish coordination across ministries, regulators and law enforcement entities.

Complementary Highway Traffic Act amendments were also filed to subject tow trucks to the Commercial Vehicle Operator's Registration (CVOR) requirements that apply to other commercial vehicles. For example, tow trucks will no longer be exempt from daily or annual inspection requirements. Moreover, an operator's safety record will now contain the results of any investigation or inspection under the TSSEA. According to MTO's intended schedule, these CVOR requirements will apply to tow trucks as of January 1, 2023.

MTO anticipates additional consultations on consumer protections and industry standards over the summer, with those regulations being filed in fall 2022. This will allow for the Director of Towing and Vehicle Storage Standards to be in place by January 1, 2023 to oversee the implementation of the certification system and the transition from municipal to provincial oversight. IBC will continue to work through its TSWG to put forward the industry's position in upcoming consultations leading up to implementation of the new provincial oversight framework.

For more information, contact:

Kim Donaldson
Vice-President, Ontario
KDonaldson@ibc.ca

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Reform of co-ownership insurance in Quebec

In 2022, IBC sent a brief to the Ministry of Finance in favour of maintaining the co-ownership reform initiated in 2018, particularly with regard to the civil liability of co-owners, which was recently challenged by some stakeholders. IBC has had several exchanges with the ministries of Finance and Housing on this matter, and the co-ownership issue is a priority for the government. IBC's advocacy had the intended effect as the government has decided not to amend the current provisions for now, to continue to explain them to all stakeholders, and to assess their effects and results over time before deciding whether to change anything.

IBC believes that in its current form, the reform in its whole will better protect the assets of co-owners and promote better joint management of the maintenance and loss prevention in condo buildings. To improve understanding of the important points of the reform, IBC is preparing another information and awareness campaign for various audiences in Quebec, including government, media and consumers.

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Defence costs regulation amended

Last April, IBC welcomed the adoption of the new regulation on commercial liability defence costs in Quebec (entitled "Regulation respecting the classes of insurance contracts and insured persons that may derogate from the rules of articles 2500 and 2503 of the Civil Code of Quebec"). IBC held several discussions with the Ministry of Finance and submitted proposals for amendments to ensure that the application of the regulation was better adapted to the reality of the market. IBC is pleased that the government accepted many of its suggestions. This is an important step forward for the commercial insurance market in Quebec.

For more information, contact:

Johanne Lamanque
Vice-President, Quebec
JLamanque@bac-quebec.qc.ca

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Professional liability in Nova Scotia

The province of Nova Scotia has contacted IBC because it is about to undertake a review of the licence structure for real estate agents that will include required liability. The province of Prince Edward Island also contacted IBC because it is exploring whether the insurance market could and/or would offer a product for funeral home operators that would respond to professional negligence claims as well as breach of fidelity obligations in relation to prepaid funeral plans. IBC Atlantic is discussing both matters with member companies.

For more information, contact:

Amanda Dean
Vice-President, Atlantic
ADean@ibc.ca

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Vehicle sharing in Atlantic region

Vehicle sharing has become a topic of interest for Atlantic municipal and provincial government officials, regulators and businesses because the region's economy relies heavily on tourism dollars and there is currently a low supply of rental cars. Atlantic governments are directing regulators to remove any barriers to operation for ride and vehicle sharing platforms. Vehicle sharing services include customized recreational camper vehicle rentals, an area that has received significant media and government attention due to the inability of owners to obtain sufficient insurance when the RVs are not in use.  

IBC will continue working with members, governments, businesses and individuals to help find solutions that fit the demand.

For more information, contact:

Amanda Dean
Vice-President, Atlantic
ADean@ibc.ca

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Ontario Budget 2022 

Auto Insurance

On April 28, the Ontario government released its 2022 Budget. After months of extensive engagement with IBC, the Progressive Conservative (PC) government included four auto insurance-related components:

  • Anti-fraud measures
  • A commitment to introduce greater consumer choice over what coverages in the auto insurance product are mandatory to purchase
  • Reiteration of the government's previously announced direction to the Financial Services Regulatory Authority of Ontario (FSRA) to review and modernize the regulator's territory rating rules
  • A commitment to review the auto insurance system's status as second payer of benefits.

Because the budget was tabled so late in the mandate and was not passed before the legislature rose for the election, all of the above items will require the newly elected PC Party to implement the commitments. 

IBC will reengage with the new government, providing advice and encouragement to implement these reforms, and to continue advocating for additional pro-consumer, cost-reducing measures.

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Auto insurance anti-fraud initiatives

The 2022 Budget commits to measures that crack down on fraud in auto insurance including "removing identified fraudsters through excluded provider lists," also known as "delisting." This measure reflects a key recommendation that IBC and its members have proposed during consultations with FSRA since 2019. Budget Bill 126 proposes amendments to the Insurance Act to establish a mandatory fraud reporting regime. The bill's language opens the door for either FSRA or a third-party entity designated by FSRA to collect, information to assess and detect insurance fraud. Although the legislature did not pass the budget, it does indicate the government's intent now that it has been re-elected.

IBC will continue to engage with the re-elected government to provide industry's perspective on how to best implement anti-fraud measures that protect drivers in the most effective way possible.

For more information, contact:

Kim Donaldson
Vice-President, Ontario
KDonaldson@ibc.ca

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Events

National Adaptation Symposium

Last month, the federal government hosted a National Adaptation Symposium to launch its public engagement and consultation process for Canada's first-ever adaptation strategy.

Don Forgeron, President and CEO, IBC, joined a panel of key partners and stakeholders that included Ehren Cory, the Canadian Infrastructure Bank's CEO, to discuss climate action and opportunities. Craig Stewart, Vice-President, Climate Change and Federal Issues, IBC, also spoke in his capacity as co-chair of the Disaster Resilience and Security Advisory Table.

In a Globe and Mail article published before the symposium, Environment Minister Steven Guilbeault signalled the need for a more sharply focused adaptation strategy. This followed advocacy efforts by IBC, the Institute for Catastrophic Loss Reduction, the Intact Centre for Climate Adaptation and other members of Climate Proof Canada, the coalition lobbying the federal government to take action to build a more disaster-resilient country.

These events illustrate the influence our industry is having on the adaptation and climate files at the cross-country level. IBC is pleased to see the national conversation and actions on adaptation, which has largely been facilitated by the P&C industry's leadership.

For more information, contact:

Craig Stewart
Vice-President, Climate Change and Federal Issues
CStewart@ibc.ca

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Relay For Life: There’s still time to donate

On June 11, 2022, Women in Insurance Cancer Crusade (WICC) participated in its 14th Relay For Life, a Canadian Cancer Society event that celebrates cancer survivors, commemorates those lost to the disease and raises money for life-saving research. For the first time since 2019, Relay For Life was held in-person at the beautiful Garrison Commons park in downtown Toronto.  While we are still confirming numbers, we are thrilled to announce that we raised $200,000 towards cancer research!

As a longstanding and dedicated partner of the Canadian Cancer Society, WICC has raised over $18 million for cancer research to date. Last year, the industry came together virtually and raised $259,131 in donations and corporate sponsor support.

While the event may be finished, WICC is accepting donations for this event until the end of the month. Click here to donate today. 

For more information, contact:

Ana Kim
WICC Team Captain Coordinator
Ana.Kim@intact.net

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Industry News Reader Survey

Tell us what you think of Industry News by completing this five-minute survey. For each response received before July 8, IBC will donate $10 to the United Way.

Click here to have your say.

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Media Highlights

National media summary from April, May and first half of June 2022

The upward trend in media attention continued into April, May and the first week of June. Over this period, IBC tracked over 2,200 media stories, an increase of 63% compared to the same time period last year, and fielded over 130 media calls, a 73% increase compared to last year.

Key topics throughout April, May and the first week of June included:

  • The severe storm in Ontario and Quebec
  • Climate and severe weather
  • Canada's first National Adaptation Strategy
  • The Ontario election and the NDP's campaign proposal to reduce auto premiums by 40%
  • Ontario Budget 2022
  • Alberta's NDP calling for a one-year freeze on auto insurance rates and accusing insurers of hiding profits
  • Auto theft and the rise of "carjackings."

Stories on these topics and other important files include:

On June 15, IBC issued two news releases – one on the preliminary insured damage estimate for the Ontario/Quebec Derecho and an update on the BC Floods estimate:

Both releases have received significant media attention and interest.

Here are a few stories at a glance:

Ontario/Quebec Derecho:

BC Floods:

Climate and severe weather:

National Adaptation Strategy:

Ontario Election 2022:

Ontario Budget 2022:

Alberta auto:

Auto theft/carjackings:

For more information, contact:

Brett Weltman
Manager, Media Relations
BWeltman@ibc.ca

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