Intact’s appetite in Alberta auto reducing, CEO says

Canada’s largest insurer is losing its appetite for writing Alberta auto business. 

And that’s because of the province’s ongoing cap on auto insurance rates, Intact CEO Charles Brindamour said during the company’s 2024 Q2 earnings call. 

The rate cap, implemented at the beginning of this year, prevents insurers from increasing premiums above 3.7%. Many insurers have expressed it’s challenging their profitability.

“Our own appetite in this province is reducing, I would say, at a pretty good speed,” said Brindamour. “At this stage, we think there are very clear solutions on the table. We shared those with the government. The ball is in their court.” 

Intact wrote $1.1 billion in Alberta auto premiums in 2023, giving it a market share of 27.2%, according to Canadian Underwriter’s 2024 Stats Guide, which uses data supplied by MSA Research. Alberta auto represents 5% of Intact Financial Corporation’s book of business, Guillaume Lamy, Intact’s senior vice president of personal lines, said on the earnings call. 

Brindamour reported Intact is bolstering its marketing budget for auto jurisdictions where it makes the most sense to write the business. Because in other Canadian provinces, Intact wants to “lean in” to writing auto business in the current environment.

“I’d say the exception here for me remains Alberta, where there’s this artificial cap that is below inflation,” Brindamour said. 

Insurers are awaiting results from the government’s public consultation on auto reform. In the meantime, several have begun to take other measures — including reducing capacity, or even exiting the market altogether.  

“It’s very hard for the industry and as a result players, as anticipated, started to exit this market,” says Brindamour. “I do think that if the cap stays in place, you’ll see more exit from the market.” 

Two companies recently announced they’d stop offering auto insurance in Alberta. 

Aviva Direct is withdrawing its auto and home insurance services from Alberta effective January 2025. Definity’s subsidiary Sonnet is phasing out its auto insurance in Alberta in December 2024. The companies, respectively, cited business growth and profitability as their reason for exiting.

And Zenith Insurance Company terminated its relationship with an Alberta brokerage that was selling its auto insurance during the province’s 2023 rate cap (which was renewed in 2024 for an undetermined period).  

Auto hard market to continue 

Across Canada, Intact ’s personal auto premium grew by 11% — up 4 points since the last quarter — due to strong rate increases and customer growth, the company said in its 2024 Q2 results. The company’s combined ratio in auto is 91.4%. 

But overall, the P&C insurance industry faces profitability challenges in auto. And it’s pursuing corrective actions to rates because of it, Brindamour says.  

“As such, we expect hard market conditions to prevail over the next 12 months and industry growth to be in the double digits.” 

In the Canadian P&C industry as a whole, Lamy said he’s seen combined ratios north of 100% for personal auto. 

“On our side, we’re writing rates in low double-digits right now,” Lamy said of Intact’s auto rates. “And with the rate approval that we have already obtained, we’re expecting to stay at the current rate level for the remainder of the year.   

“We’ll adapt our strategy in each province based on the local outlook on trends and inflation. And nationally, we’re already rate-adequate. Outside of Alberta, we’re in a good position to execute on rates where we need them and when we need them.” 

Feature image by iStock.com/YinYang