After years of over-capacity, intense competition, and soft-market conditions, Canada’s property/casualty industry is in a period of low profitability, readjustment and rationalization, according to a special report, “Canada’s P/C Market is Struggling to Turn the Corner,” released by A.M. Best Co.

The Canadian property/casualty market is headed for its worst year since the early 1980Õs due to a combination of poor underwriting results and the sagging equity market, states the report.

In 2000, the combined ratio for the industry was 108.5%, the highest since 1993. The Ontario auto market, which comprises almost 25% of the total Canadian property/casualty market, is the most serious problem, says the report. “The industry will be hard pressed to emerge from its difficulties, unless rate adequacy in this market is achieved.”

Premium rate hardening began in the latter half of 2000, for total year-over-year growth of 5.3%, with initial hardening more pronounced in commercial lines.

Single and double-digit rate hardening is continuing in 2001, as companies attempt to rein in underwriting losses. “During this process, insurers will be challenged to preserve business, fend off political pressures and manage distribution forces.”