Canada’s personal and commercial insurance industry is “likely to return to an underwriting profit” in 2017 following estimated, record insured losses of $3.8 billion due to the wildfires in Fort McMurray, Alta., last year, according to Fitch Ratings Inc.
“Non-life Canadian insurers are expected to see an underwriting profit in 2017 as pricing fundamentals remain steady,” says Jim Auden, managing director of Fitch Ratings, in a statement. “However, in the medium-term economic uncertainty could dampen insurer revenue and earnings expansion.”
Although the Alberta wildfire represents a record loss event for the Canadian insurance industry, Fitch says that an earthquake, particularly in British Columbia, and to a lesser extent the Ontario/Quebec region, remains the single largest “insurance modelled risk” for Canada.
Fitch also notes that it expects continued consolidation in the sector: “Potential future transactions may emanate from strategic shifts within foreign-owned insurers and Canadian financial institutions that own insurers. In addition, the investment required to keep pace with technology advances in data analytics and more sophisticated modeling techniques could marginalize smaller players and fuel market consolidation.”