(March 13 – 10:30 ET) – Canadian property and casualty insurers are using 2001 as a rebuilding year, looking forward to an improved 2002, according to the Insurance Bureau of Canada.

In the final quarter of 2000, the P&C industry lost $130 million after taxes. The first quarterly loss for the industry in almost 18 years.

It is also the weakest quarterly result ever recorded by the industry. The industry’s return on equity in 2000 was 6.2%, down from 6.5% in 1999.

Realized gains, however, increased by 163% because of very strong results in the first three quarters. Investment income also improved by 6.3% in 2000, producing an overall return on invested assets of 9.5%, compared to 7.3% in 1999.

Early winter storms and other factors contributed to a surge in claims costs, while investment income collapsed, according to the IBC’s latest report analyzing the financial performance of Canada’s P&C industry.

“The greatest concern,” says the report’s author, IBC chief economist Paul Kovacs, “is the increase in claims costs. Automobile insurance claims were more than 50% higher at the end of 2000 than during the same quarter of 1999. Car insurance claims in Alberta were up 16%, while personal property claims were up by 40% to 60% in Ontario, Alberta and British Columbia.”

“The encouraging news, however,” says Kovacs, “is renewed revenue growth. Premium income for car insurers was 15% higher in the closing quarter of 2000 than a year earlier. Personal property premiums were up more than nine per cent and commercial property premiums were up 16%.”

Kovacs believes that the current economic slowdown will temporarily improve automobile insurance underwriting, partly because people tend to drive less when the economy is weak. On the other hand, he notes, “a slowdown in the economy also adds to concerns about fraudulent claims, arson and theft.”