Recent News

MPI files rate request for first year of Driver Safety Rating system

02/02/2009

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Manitoba Public Insurance (MPI) is proposing that no one pay increased premium during the first year of its new merit/demerit system, called the Driver Safety Rating (DSR), and that the maximum vehicle insurance discount remain at 25%.

MPI filed rates for the new program with the Public Utility Board on Jan. 30, 2009. The Driver Safety Rating was accepted by the Manitoba government earlier this month, and will come into effect for Autopac policies and driver’s licences renewed after Nov. 1, 2009.

The objective of DSR is to reward safe driving through a system of premium decreases or increases tied, respectively, to safe and risky driving behaviours. For example, a driver's risk will be rated on a sliding scale of between +15 and -20, with zero in the middle. Drivers would move one merit point up the scale for each year they go without a conviction or at-fault accident. Conversely, they would incur demerit points, sinking them down the scale, for convictions or at-fault accidents.
Going up the scale would result in premium discounts, whereas going down the scale would result in premium surcharges.

"If the rates proposed today are accepted by the PUB, Manitobans will collectively pay almost [Cdn]$11 million less in driver premiums from the day the new model is introduced and onward," said MPI CEO Marilyn McLaren. "The safest Manitoba drivers will pay no driver premium (or five dollars if they don’t own a vehicle), compared to their current driver premium of twenty dollars."

MPI's rate application covers the period beginning between Nov. 1, 2009 (when the Driver Safety Rating comes into effect) and Feb. 28, 2011. For this 16-month transition period, Manitoba Public Insurance is asking PUB to keep almost everyone’s rates about the same as or slightly lower than they would have been under the old system.“As we increase the discounts for the safest drivers, we’ll also need to increase the penalties for those who persist in higher-risk behaviour," McLaren said. "We want to ensure those drivers have a chance to improve their habits before higher penalties are introduced, so for the first year, we are proposing that no one will pay more, and the maximum vehicle insurance discount remain at 25%."Within a few years, we expect to introduce higher discounts for safer vehicle owners.”

Source: Canadian Underwriter

Fed step in to rescue AIG

09/17/2008

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$85bn package sees US government take 80% equity stake in insurer.

The Federal Reserve Bank of New York has saved AIG with an $85bn rescue package ensuring the company can meet its liquidity needs.

The Bank is providing a two-year revolving credit facility that will see the government receive a 79.9% equity stake in AIG.

The insurer will pay interest on the loan at 8.5% above the three-month London Interbank Offered Rate.

In a statement, AIG said: "The AIG Board has approved this transaction based on its determination that this is the best alternative for all of AIG's constituencies, including policyholders, customers, creditors, counterparties, employees and shareholders. AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues."

It added: "We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policyholders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis. We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets. In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."

Source: Insurance Times

Gustav was no Katrina

09/02/2008

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Loss estimates revised down, as modeling firms count the cost of Hurricane Gustav.

Fears that Gustav could be another Katrina proved misplaced. Gustav turned out to be both smaller and weaker than Katrina at landfall.

“Since landfall, the center of Gustav has moved inland and already winds are diminishing,” said Dr. Peter Dailey, director of atmospheric science at AIR. “On Tuesday, Gustav is expected to be a tropical depression and slowing to a crawl across northeast Texas where it could dump as much as 20 inches of rain in some locations.”

Hurricane Gustav made landfall yesterday about 70 miles west of New Orleans as a strong CAT 2 hurricane, weakening from a CAT 3 hurricane prior to landfall.

Maximum sustained winds at landfall were about 110 mph. While this meant that property wind damage should be less than expected, the fact that it reached category 3 offshore influenced the tidal surge.

Flooding was reported in New Orleans’ Lower Ninth Ward after waves overcame a stretch of several hundred yards of the Industrial Canal’s floodwall. About half the streets in the ward are under ankle- to knee-deep water. However, according to the Army Corps of Engineers, the overtopping does not pose a major threat and pumping stations are operating. The levee failed during Katrina but has since been strengthened.

Earlier, winds peaked at 150 mph after Gustav exited Cuba, but it dropped to CAT 3 level winds for most of the transit across the Gulf of Mexico. The highest seas are estimated to have been 32 feet, high enough to do damage to platforms in the Gulf. Last night natural catastrophe modeling firm EQECAT estimated onshore property damages (industry loss) at from $6bn to $10bn, much lower than the $10bn to $30bn range EQECAT estimated earlier in the day when Gustav as expected to make landfall as a CAT 4 hurricane.

Rival modeling firm AIR estimates that insured losses to onshore properties in the U.S. as between $2bn and $4.5bn, with an expected loss of $3 billion. These loss estimates do not account for any flooding that may yet result from the breach of natural defenses such as levees, AIR explained.

“Hurricane Gustav not only failed to reintensify during its passage through the Gulf of Mexico, it actually weakened slightly just before landfall,” said Dr. Peter Dailey of AIR. “For much of Gustav’s journey through the northern Gulf of Mexico, Gustav's intensity was regulated by the ingestion of dry air from the west, limiting its ability to reintensify. Heat content in the Gulf waters along the U.S. coastline is significantly cooler and shallower than in the central Gulf, which also prevented the storm from gaining strength.”

RMS, another major modeling firm, put insured losses from Hurricane Gustav at between $4bn and $10bn. This includes both on and offshore losses from wind and storm surge, and does not take account of any potential damage to the levees in New Orleans, or flooding from excessive rainfall which may occur in the following days.

OFFSHORE

Offshore energy losses are more difficult to estimate than onshore. EQECAT estimates that production lost in the Gulf will be approximately 25 million barrels of oil and 200 billion cubic feet of natural gas. EQECAT said that these figures are an integration of the expected initial loss in production due to damage, plus the expected ramp-up in production as damage is repaired, over the next 12 months. The price of oil is currently $115 per barrel, and the price of gas is $7.5 per thousand cubic feet.

EQECAT therefore calculates a loss figure exceeding $4bn. However, as EQECAT points out, insurance contracts do not necessarily cover all (or any) lost production, and when they do they may not cover it at this price, so insured losses are expected to be a fraction of this figure. “In prior events, the ratio of property / other coverage losses to have been about 1:1,” EQECAT added.

RMS estimates the range for offshore damage to oil platforms and wells, as well as production interruptions caused by wind and waves, as between $1bn and $3bn.

Source: Global Reinsurance

Subprime financial losses expected to be huge, but mitigating factors may temper insurance losses

05/16/2008

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Projected to be bigger in scope than the savings and loan crisis in the late 1980s and early 1990s, the subprime mortgage and credit derivative fiasco currently embroiling the United States is merely in its infancy, panelists told people attending a PLUS Canada seminar in Toronto.

Initial estimates have projected the value of insurance claims arising out of the U.S. subprime mortgage issue to be in the neighbourhood of between Cdn$3 billion and Cdn$9 billion.
Thus far in 2008, panelists told people attending the PLUS Canada seminar, 79 class action lawsuits related to subprime have been launched in the United States.

These early lawsuits represent only be the tip of the iceberg, panelists noted. "There have been losses, but we are very, very early in the game," said Kevin LaCroix of Oakbridge Insurance Services, based in the United States. "If you see [subprime] as a nine-inning game, we are only in the first inning."
In many cases, companies have not yet declared the losses or write-downs related to the subprime crisis. These public financial statements would normally trigger the kinds of lawsuits that lead to insurance claims, speakers observed.

Arturo Cifuentes, the managing director of R.W. Pressprich & Co. in New York, New York, said the financial instruments used to repackage subprime mortgage loans into credit derivatives are almost "mind-numbing" in their complexity, which could lead to protracted litigation and large-scale costs.
Also, LaCroix noted, there is a "war of all against all," in which shareholders are suing companies, and financial organizations are suing each other for their role in the financial losses arising out of subprime.
But while the subprime issue is expected to lead to a large number of losses, many of the estimates of insurance losses related to subprime to date have been "almost irresponsible," LaCroix noted.

Panelists cited a number of factors that could mitigate the number and value of insurance claims:
some cases might be thrown out of court;  many banks in the United States have only Side A coverage for D&O claims, and so insurance claims in these situations would only be triggered in the event of a bankruptcy related to subprime.

Side A does not typically cover litigation against boards or individual directors.
in Canada, subprime-related instruments account for only 5% of Canadian companies' financial portfolios, representing a total value of less than Cdn$10billion. In the United States, on the other hand, subprime-related credit instruments account for 22% of company portfolios, with a total value estimated at about UD$570 billion.

Source: Canadian Underwriter

Climate change tops list of risks to insurers

03/14/2008

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Potential climate change is the greatest strategic risk currently facing the property and casualty insurance industry, according to an Ernst & Young report. Demographic changes and catastrophic events follow closely behind.

For the study, Strategic Business Risk 2008, Ernst & Young and Oxford Analytica interviewed more than 70 industry analysts from around the world to identify the emerging trends and uncertainties driving the performance of the global insurance sector over the next five years.

The Top 10 risks identified were: climate change; demographic shifts in core markets; catastrophic events; emerging markets; regulatory intervention; channel distribution; integration of technology with operations and strategy; securities markets; legal risk; and geopolitical or macroeconomic shocks, a release says.

Many of the risks are interlinked, a company release notes, and raise questions about how these risks will change what companies offer customers, the way that they offer their services and where.
The analysts identified five additional emerging risks (not part of the Top 10) that have the potential to become as significant during the next five years.

These include: over reliance on model-based risk management; threats to industry reputation; losing the war for talent; increasing exposure to global regulatory heterogeneity; and the possible emergence of entirely new risks.

Source: Canadian Underwriter

City not liable for damage when horesplay results in broken plate glass window

1/31/2008

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City not liable for damage when horesplay results in broken plate glass window

The Ontario Superior Court ruled the City of Brantford was not liable for damages after two youths shattered the plate glass of the Brantford Civic Centre while engaging in horseplay.

In Mott v. Brantford (City), the plaintiff, Bobby Joe Mott, had taken a break from skateboarding at a skateboard park on the premises and approached the Civic Centre for a drink of water.

At that point, his friend, Nick Atanasov, grabbed Mott in a headlock and began to engage in some horseplay.

The two were closer to the Civic Centre's plate glass windows than they thought. The next thing he knew, Mott testified, he was sitting on the window ledge, bleeding and with shards of glass all around him, wondering what had happened.

Mott sued for damages and the court determined the City of Brantford was not liable.

Counsel for Mott argued the City ought to have known that with a skateboard park on its premises

and knowing that skateboarders demonstrate "risk-taking" characteristics” the Civic Centre should have opted for the installation of a safer form of glass than plate glass.

And at one point, in obiter remarks, Ontario Superior Court Justice Jane Milanetti appears to agree with the plaintiff. "I do not accept that mere compliance with the Building Code is all that is required to resist liability," she wrote, rejecting the defence's claim that plate glass conformed to Building Code standards.

In the end, however, Milanetti noted the incident did not actually happen at the skateboard park, supposedly the reason for the stronger windows. In addition, incidents of horseplay in the area had happened many times before without it resulting in the loss of a plate glass window.

"I find as fact that the City of Brantford had no reason to re-think the use of the glass," she concluded.

Source: Canadian Underwriter

Insured wildfire loss could top $1.6 billion

10/25/2007

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NEW YORK (Reuters) - Insured losses from California wildfires could exceed $1.6 billion if the fires continued to spread, a risk modeling firm said on Thursday.

Risk Management Solutions, which predicts and assesses insured damages, said in a statement that the wildfires which have devastated Southern California would likely cost insurers between $900 million and $1.6 billion. "(But) if the wildfires continue to spread in this ongoing situation, losses are expected to reach or even exceed the higher end of this estimate," Risk Management Solutions said.

Thus far the wildfires that have destroyed 1,300 homes and forced the evacuation of 500,000 people are now in their fifth day, but firefighters have largely halted the spread of destruction.

Officials said cooler temperatures and weaker winds allowed them to win a measure of control for the first time and that the worst was behind them.

Though relieved that the hot, dry winds driving the flames had weakened, they conceded that offshore breezes replacing them presented a danger. Even those milder winds could trigger dangerous runs by some of the fires.

Earlier estimates by the Insurance Information Institute pegged damages at $1 billion.

Insurers such as Allstate Corp say that so far they have limited data to work with until homeowners return to their properties and make claims.

'RANDOMNESS'

On Thursday, Travelers Cos Inc Chief Executive Jay Fishman said in a conference call that the "randomness" of the fires, which destroyed one house but left the next standing, made it difficult to assess damages. Travelers insures about 2 percent of the homeowners in the affected areas, and about 6 percent of the businesses, he said.

The wildfires, which broke out over the weekend after the winds began to blow, have blackened nearly 800 square miles , claimed six lives and injured dozens of people, many of them firefighters.

San Diego County has suffered total losses in excess of $1 billion, and three of the largest fires were still burning out of control.

Officials there said that even when the fires were extinguished they would face a major cleanup and huge costs.

(Reporting by Ed Leefeldt and Dan Whitcomb, editing by Gerald E. McCormick)

Source: Reuters

MPI reports profit growth despite increased claims cost and volume

10/04/2007

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Manitoba Public Insurance (MPI) credits a Cdn$80.3 million profit for the first half of 2007 to increases in investment and premium revenue, despite enduring the worst summer for weather-related claims in a decade.

The figure includes a net income of Cdn$56.9 million from the basic Autopac line of business, and marks a Cdn$14.6 million increase over the same period of 2006, an MPI statement says.
Written premiums also increased Cdn$13.5 million over last year to $439.5 million as Manitobans purchased more and newer vehicles, the statement says.

This gain, however, was more than offset by higher claims costs, which increased by $23.8 million or 6.8% over last year,” the statement says, adding that physical damage claims increased by Cdn$16.4 million.

The August 9-10 hailstorm that struck Dauphin was one of the single largest catastrophic events in the corporations history, resulting in approximately 13,000 claims with an estimated value of Cdn$50 million, MPI says.

Don Palmer, vice president of finance and CFO, MPI, said in a statement that because the corporation purchased reinsurance against such risks, the real exposure to premium payers is limited to Cdn$10 million.

Despite the hailstorm and an increase in claims and bodily injury costs, a strong investment environment continues to put Manitoba Public Insurance in a strong financial position, Palmer said.

Source: Canadian Underwriter

99% of Katrina claims settled

08/16/2007

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The Insurance Information Institute has revealed how few Katrina claims remain in dispute

The single largest loss in the history of the insurance industry occurred two years ago this month when

Hurricane Katrina struck the Gulf Coast, causing $40.6bn in insured damage. Nearly two years later, the overwhelming majority of claims have been settled.

The magnitude of Hurricane Katrina triggered a re-examination of how the United States deals with the financial consequences of natural disasters among insurers, reinsurers and public policymakers, which continues today, according to the Insurance Information Institute (I.I.I.).

Despite the attention focused on lawsuits filed following this catastrophic storm, the number of claims in litigation accounted for a very small percentage of the total number of claims filed and most of those are no longer in contention. The I.I.I. estimates that fewer than 2% of homeowners’ claims in Louisiana and Mississippi were disputed either through mediation or litigation.

Insurance companies have paid an estimated $40.6bn to policyholders on 1.7 million claims for damage to homes, businesses and vehicles in six states. By contrast, Hurricane Andrew, the previous record holder, resulted in $15.5bn in losses in 1992 ($22.2bn in 2006 dollars) and 790,000 claims.

Louisiana ($25.3bn) and Mississippi ($13.6bn) received by far the most insurance claims dollars to aid in their recovery.

Approximately 99% of the 1.2 million homeowners insurance claims from Hurricane Katrina, including those in hard hit Louisiana and Mississippi, have been settled. Claims payments to homeowners in affected states exceeded $16bn, approximately 93% of which went to Katrina victims in Louisiana and Mississippi.

“While 2005 was by far the worst year ever for insured catastrophe losses in the US, future storms could prove even costlier, reaching upwards of $100bn,” said Dr Robert Hartwig, president of the I.I.I. “Disaster losses along the coast are likely to escalate in the coming years because of huge increases in development and soaring property values.”

“Insurers cannot increase rates to make up for past losses. Rates must be based on projections of future losses in a given state,” continued Hartwig. “Insurers cannot arbitrarily raise rates; they must be reviewed and approved by state insurance departments. Companies must demonstrate that there is an increased risk in a specific state, and losses from one state cannot be used to raise rates in another.”

Source: Global Re-insurance

Manitoba Public Insurance reports solid Q1

07/19/2007

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Manitoba Public Insurance reports solid Q1

Manitoba Public Insurance has reported a net income of Cdn$64.8 million for 2007 Q1, spurred by a growing vehicle fleet and solid investment income.

Earned revenues increased by Cdn$10.5 million over 2006 Q1, due to an increase in number and value of insured vehicles, while investment income was up Cdn$10 million from 2006 Q1 to Cdn$76.1 million.

Claims costs for the first three months increased Cdn$8.1 million to Cdn$173.2 million, while the number of claims reported by Manitobans during the quarter decreased by 3,000 to 60,613, Barry

Galenzoski, vice president corporate finance and CFO, said in a release.
He added that physical damage claims increased by Cdn$3.5 million mainly because of an increase in average cost per claim, while injury claims increased by Cdn$2.7 million.

We are pleased with the first quarter results, Galenzoski said. At the same time, rising claim costs are a reminder to motorists that they influence their rates through their driving behaviour.

The company mailed cheques to policyholders in this quarter amounting to Cdn$59.8 million as part of a basic premium rebate ordered by the Public Utility Board. This is the third time in the last five years that residents have received rebates, a release noted.

Source: Canadian Underwriter

MPI to hold the line on auto rates

06/14/2007

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Manitoba Public Insurance (MPI) is proposing to hold the line on auto insurance rates next year and provide its customers with a Cdn$49-million rebate in the spring.

The public insurer has filed an application with the Public Utilities Board (PUB) proposing no increase in premium revenue for 2008-09 and a 7.5 % rebate, which would provide a Cdn$90 rebate on the average vehicle and mark the fourth rebate in six years.

We know that Manitobans expect and require rate stability because it helps them manage the family budget, MPI's president and CEO Marilyn McLaren said in a release. The rate application means that over a 10-year period, Manitobans will have had only one rate increase, with five rate decreases and four years of holding the line on auto insurance rates. During the same time, we have provided our customers with four rebates worth Cdn$250 million.

At the same time it filed its rate application, MPI made suggestions for streamlining the PUB process. The corporation is proposing that adjustments be allowed without the need for hearings when there is no substantive rate change.

This year, we are spending [Cdn]$1 million on a process and application that asks for no increase to overall rates, McLaren said. We believe that we can suggest rules to save the costs of some hearings.

Source: Canadian Underwriter

El Nino weakens, portending more 2007 storms

03/20/2007

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El Niño – which moderated storm activity last year – has dissipated, thereby increasing the likelihood of 2007 being an active season, according to Tropical Storm Risk (TSR), a consortium of experts on seasonal climate forecasting led by the Benfield UCL Hazard Research Centre.

TSR predicts Atlantic basin and U.S. landfalling hurricane activity in 2007 will be about 75% above the 1950-2006 norm, thus upping its previous December 2006 forecast of 60%.

“This is the highest March forecast for activity in any year since the TSR replicated real-time forecasts started in 1984,” TSR announced in a posting on Benfield’s Web site. “It is 86% likely that U.S. landfalling hurricane activity in 2007 will be in the top one-third of years historically.”

The prediction includes:
· 17 tropical storms for the Atlantic basin as a whole, with nine of these being hurricanes and four intense hurricanes; · Five tropical storm strikes on the U.S., of which two will be hurricanes; and
· Two tropical storm strikes on the Caribbean Lesser Antilles, of which one will be a hurricane.
Commenting on the forecast upgrade, TSR lead scientist Mark Saunders said: “The El Niño conditions present since September 2006 dissipated rapidly during February. This has increased the expectation since last month that weak La Niña conditions will occur during the summer.

"As a result, the July to September Caribbean trade wind anomalies are expected to be weaker than thought previously. This factor will increase cyclonic vorticity and cause more storms to be spun up.”

Source: Canadian Underwriter

MPI lowers 2007 auto rates; offers 10% rebate for 2005-06 year

03/02/2007

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Manitoba Public Insurance (MPI) has lowered auto insurance rates for three-quarters of the province’s vehicle owners in 2007.

In addition, it is offering a 10% rebate on premiums paid during the 2005-06 year.

“The rates taking effect today are 2.6% lower overall than rates in 2006-07, marking the eighth year out of the last nine in which [MPI] has held the line or reduced basic Autopac rates without lowering customer service or reducing coverage,” MPI announced in a press release.

Premiums will decrease for 644,050 out of MPI’s 864,086 policies.

For about 21% of those receiving reductions, the decrease is expected to be $40 or more.

About 31% will see their premium decreased by $30, and roughly 40% will pay $20 less.
The average family passenger vehicle premium will be $805, a reduction of $25.
Renewal dates for customers are staggered throughout the year, so some vehicle owners will not pay the new rates until February 2008.

“By early May, the corporation also expects to have a 10% premium rebate ordered by the Public Utilities Board in the hands of customers who paid for basic Autopac during the 2005-06 insurance year,” MPI announced.

The Cdn$60 million rebate will be the second rebate in as many years, MPI says. “In all, more than 600,000 cheques will be sent out with the average being worth about $100.”
In total, nearly Cdn$200 million will have been returned to customers over the last six years, MPI president and CEO Marilyn McLaren said in a statement. “No private auto insurer can make such a statement.”

Source: Daily News

Marsh sells Putnam to Great-West Lifeco for US$3.9 billion

02/01/2007

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Marsh & McLennan Companies, Inc. (MMC) has announced the sale of Putnam Investments to Great-West Lifeco Inc., a financial services holding company controlled by Canada-based Power Financial Corporation, for US$3.9 billion in cash.

Putnam Investments is a global money management firm with about 3,000 employees and more than 68 years of investment experience. It had US$192 billion under management at the end of 2006.
The boards of directors of MMC and Great-West Lifeco have approved the transaction. The deal is expected to close in the middle of this year, subject to regulatory approval, required client consents, and other customary conditions.

MMC president and CEO Michael G. Cherkasky said: "This is an important transaction for MMC and its shareholders. We will receive an attractive price for Putnam, strengthen our ability to focus on our core businesses, and significantly enhance our financial flexibility.

"Selling Putnam is another important step in enhancing long-term shareholder value and driving additional success in our risk and human capital businesses.

"The proceeds to MMC from this sale, combined with our strong cash flow, will give us the flexibility to consider a number of desirable options to further strengthen our company such as investing in our business, stock repurchases, and debt reduction."

Goldman, Sachs & Co. and Merrill Lynch & Co. acted as MMC's financial advisors for the transaction. Davis Polk & Wardwell acted as MMC's legal counsel.

Source: Canadian Underwriter

MPI lowers auto rates; offers 10% rebate

11/22/2006
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Three out of four Manitobans will pay less for basic auto insurance coverage next year and everyone who paid for auto insurance in 2005-06 will receive a 10% rebate, Manitoba's Public Utilities Board [PUB] ruled yesterday.

It will be the eighth year in nine that Manitoba Public Insurance (MPI) has held the line or reduced basic Autopac rates without lowering customer service or reducing coverage, MPI announced today in a press release.

The rebate is the third provided to vehicle owners in the last six years, bringing the total to Cdn$200 million. It will be funded through the corporation's Rate Stabilization Reserve (RSR), which is designed to cushion Autopac rates from unexpected cost fluctuations.

"Today's ruling confirms the strength of the public auto insurance system," said MPI president and CEO Marilyn McLaren. "While insurance rates in other jurisdictions with private auto insurers are on the rise, [MPI] has provided nearly a decade of rate stability and about Cdn$200 million in direct payments to Manitoba vehicle owners in the form of dividend payments."

PUB's ruling also means that as of April 2007, all current vehicle owners who paid basic Autopac in 2005-06 will receive a rebate cheque in the mail that averages $100. Then, when most Manitobans renew their insurance throughout the 2007-08 year, 75 per cent of Autopac customers will pay less under the rates approved by the PUB.

• it capped motorcycle increases at five per cent and moped rate increases at 25% and
• the average family passenger vehicle premium will be $805 next year, a reduction of $25.

Overall, the ruling means 644,000 vehicle owners will see their premiums decrease or stay the same when the new rates take effect on Mar. 1, 2007. Because of staggered renewal dates, some vehicle owners will not pay the new rates until February 2008.

Source: Canadian Underwriter

MPI investment income decreases, claims up in 2006

10/10/2006
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A strong first half of the year has put Manitoba Public Insurance (MPI) into a stable financial position as it heads into the traditionally claims-prone winter months, the government insurer noted in a press release.

For the six months ended August 31, 2006, the corporation reported net income of CD$65.4 million. The results are CD$21.6 million less than in the first six months last year.

Nevertheless, MPI stated in a press release, the financial results are "consistent with the corporation's seasonal pattern of earning profit in the first half of the fiscal year and then paying out more for claims during the winter months of the second half."

Barry Galenzoski, MPI's vice president of corporate finance and CFO, said net income from operations was down CD$21.6 million from 2005 Q2, "mainly because weaker equity markets reduced investment income by CD$13.7 million for the six months."

The corporation's earned revenues from insurance premiums increased CD$17.9 million during the first half of the 2006 fiscal year, as the size and value of the Manitoba vehicle fleet continued to grow. This was offset by higher claims costs as the number and value of crashes and injuries increased compared to the first six months of 2005, MPI noted.

Overall, claims costs for the six months ended Aug. 31, 2006 increased 7.8% to CD$351.1 million over the same period last year.

There were 124,155 physical damage claims filed in the first half of 2006, increasing costs by CD$9.2 million, up to CD$197 million.

The number of people injured in vehicle crashes in Manitoba increased by 457 compared to the first six months of 2005, bringing the total injury claims to 7,920. The severity of these claims also contributed to an 11.5% increase in injury costs to CD$115.3 million.

"There are no surprises in our six-month results," Galenzoski said. "Our revenues, claims costs and expenses are within our projection, which means we're heading into the fall and winter months in a stable financial position."

Canadian travellers warned of hurricane season

8/30/2006
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Canadians are being urged to review their travel plans and take necessary precautions when visiting regions forecasted to be affected by hurricanes.

The warning comes from The Honourable Peter MacKay, Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency, whose announcement was made in response to the potential damage of Ernesto.

MacKay told Canadians that it is important to take charge of their own safety when travelling abroad. In order to do so, he says individuals must prepare accordingly by using up-to-date information. Specifically MacKay refers to http://www.voyage.gc.ca, as a source for such information.

"Our goal is to encourage safe and hassle-free travel abroad by urging Canadians to take a precautionary approach," MacKay says.

Canadians who choose to travel to hurricane-prone regions during the annual June-November tropical storm season are advised to:

* Confirm travel arrangements prior to departure and ensure that travel insurance allows for trip cancellation/interruption in the event of a hurricane.
* Check the Consular Affairs website's country-specific "Travel Reports" and "Current Issues" to obtain up-to-date information and advice about destinations.
* Ensure that copies of travel documents—including the name of tour operators, flight details, hotel name and location, room number and telephone numbers, cruise ship details and itineraries—are left with family or friends in Canada.
* Consider registering with the Foreign Affairs and International Trade Canada (DFAIT) registration service at http://www.voyage.gc.ca. Registration can be done online or by calling the responsible Canadian embassy, high commission or consulate abroad to request a registration form.
* Monitor local news broadcasts and weather reports carefully; follow the advice, including departure orders, of local authorities and/or tour operators; and know how to contact the nearest Canadian embassy, high commission or consulate.
* Carry details on how to contact DFAIT's Emergency Operations Centre at 1-800-267-6788 (from the United States or Canada) or 613-996-8885, which operates 24 hours a day, seven days a week, and accepts emergency collect calls from Canadians requiring assistance abroad.
* Check weather forecasts for the region from the National Hurricane Center in the United States. Environment Canada's Canadian Hurricane Centre also provides recommendations on hurricane preparedness.
* Contact their close friends and relatives to let them know of their well-being (in case of a major storm or incident).

According to MacKay,many companies in the Canadian travel industry offer some flexibility if weather conditions are adverse before and during travel. In the event of a hurricane, some tour operators and airlines will make an assessment on a case-by-case basis of the category and severity of the storm and, if warranted, allow affected travellers to opt to travel as planned or to change travel dates and/or destinations.

Source: Canadian Underwriter

US$5-billion underwriting loss for U.S. P/C industry in 2005

8/21/2006
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The U.S. property and casualty industry reported a US$5-billion underwriting loss and a combined ratio of 100.9% in 2005, according to a recent study by rating agency A.M. Best.

The result represents a US$10.5-billion reversal from 2004's underwriting profit, and a deterioration of 2.4 points from the industry's 2004 combined ratio of 98.5%.

"The underwriting loss resulted from US$57.7 billion in catastrophe losses primarily from a record-breaking hurricane season," A,M, Best said of its study.

"Catastrophe losses in 2005 added an estimated eight points to the industry's combined ratio, double the point increase seen in calendar year 2004," A.M. Best noted in a press release. "Interestingly, when catastrophe losses are excluded, the combined ratios for 2005 and 2004 both would be profitable at a 92.9% and 94.5%, respectively, further underscoring the resilience of the industry."

As well, the increase in the industry's combined ratio resulted from the reported 144.8% combined ratio of the reinsurance segment. "The segment was impacted significantly not only by the frequency and severity of the 2005 hurricane season, but also by a number of one-time transactions that skewed the performance of the segment."

Results in the personal lines segment deteriorated modestly by 2.8 points in 2005, A.M. Best noted, as the year-end combined ratio increased to 97.7% from 94.9% at year-end 2004.

"Despite record hurricane losses, the commercial lines segment reaped the benefits of several years of increasing rates and reported a combined ratio of 99.4%," A.M. Best reported. "This marked a 0.8-point improvement over 2004, even though catastrophe losses for 2005 increased 3.1 points compared to 2004.

A.M. Best further noted the "slight" deterioration of 0.1% in the industry's operating ratio — to 88.8% — was offset by a favorable increase in net investment ratio (net investment income as a percent of net premiums earned). The increase in the net investment ratio resulted from positive operating cash flows.

"Overall, despite absorbing record-high hurricane losses resulting in an underwriting loss, the resilience and profitability of the industry is apparent from its reported 88.8% operating ratio," the A.M. Best study concludes. "Although the industry reported an underwriting loss, it performed much better than expected. Excluding record-high hurricane losses, the underwriting results were strong, illustrating the fundamental strength of the industry as a whole."

Source: Canadian Underwriter

Manitoba lowers auto premiums; credits auto theft program

6/20/2006
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Three out of four Autopac customers could pay less for auto insurance next year because of a 2.6% rate cut made possible by expected reductions in auto theft, according to Manitoba Public Insurance (MPI).

MPI has filed a rate application with the province's Public Utilities Board that would reduce the cost of Basic Autopac for nearly 650,000 policyholders and cut the average family passenger vehicle premium by $25 to $830.

If approved, MPI says, it will be the eighth year in nine that the corporation has either held the line or decreased rates for basic compulsory coverage.

"Manitobans are continuing to enjoy the benefits of the best auto insurance system in Canada," MPI president and CEO Marilyn McLaren said. "After nearly a decade of rate stability, Manitoba has among the lowest auto insurance rates in the country.

"Just a month after we returned CD$58 million to Manitobans in the form of a premium rebate, we are dialing back rates for the 2007-08 insurance year."

The proposed rates would be effective Mar. 1, 2007. However, since renewal dates are staggered, some vehicle owners wouldn't pay the new rates until Feb. 29, 2008.

Overall, the corporation expects:

• Premiums would decrease for 644,050 of the 864,086 policies. The reduction would be $40 or more for about 21% of those receiving reductions. About 31% would pay $30 less, and 40% would pay $20 less.
• Of the 19% of customers who would pay more, about two-thirds would see increases of less than $20.

McLaren says rates are dropping because Manitobans are starting to take action against auto theft by protecting their vehicles with immobilizers.

"We said that all Manitobans would benefit in many ways when we win the fight against auto theft," McLaren said. "This rate reduction is proposed with the expectation that most at-risk vehicle owners will continue to respond to our [immobilizer] program and protect themselves from theft."

Source: Canadian Underwriter

Marine insurance rates for Lebanon evacuation ships soar; costs "filter down" to charterers

7/28/2006
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As marine insurance rates soar in the area, some commercial vessels being used by a number of governments to evacuate people are charging $100,000 a day.

London-based Peter Bingham of the marine division, financial and risk services firm Alexander Forbes, said also he had one of them actually excluding passenger liability.

He said the increased rates “filter down the line.”

In Canada, Foreign Affairs said insurance for the vessels it is chartering is covered under the government’s contracts with each ship’s company.

A spokesman for Aon’s marine insurance division said rates for evacuation vessels have increased by two-and-half times in a week.

Lloyd’s Joint Cargo Committee has upgraded Israel on its war risk perils and added Lebanon. This means companies seeking to transport goods in the area will also face an additional premium.

The Lloyd’s Market Association has warned on its cargo and hull lists both areas are of high risk.

Alex Quinn, press officer for the association, which represents the various businesses in the market, said insurance for the vessels is available, depending on the price.

“It’s entirely up to the underwriters whether they take this information and apply it when underwriting risks and how they apply that information as well.

“Whether they either withdraw individual hull premiums, it’s entirely up to the underwriters.”

Alexander Forbes’ Mr. Bingham said there has also been an effect on some of the Lebanese ship owners. They’ve cancelled their insurance because they have had to close their offices in Beirut.

War risk cover is available — at a price.

He said like all underwriters, those who cover this risk “do seem to sort of panic as soon as anything like this happens. And rates do go up considerably on each side, on the insurance side and moneys to go there to pick people up.

On mutual Marine Protection and Indemnity clubs, with whom he deals, there is a concern among members whose vessels do not go into the area that they will have to pay increased premiums if there is a big claim from one who has.

P&I clubs, which cover a large majority of the world’s shipping tonnage, are made up of pools of owners to provide cover for most of the risks not covered by hull insurance.

This includes liability for personal injuries and deaths of passengers, including medical bills.

Members have to pay their share of claims costs until their reinsurance contracts kick in.

Source: Thompson’s World Insurance News 2006

Lloyd's Warns Insurers To Face The Challenges Of Climate Change

6/5/2006
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The insurance industry must face up to the growing threat of climate change or risk being swept away, according to Lloyd's, the world's leading specialist insurance market.

A new report, ‘Climate Change, Adapt or Bust’, published today by Lloyd’s, warns that insurers must act now to understand and actively manage risks from emerging threats such as greenhouse gases and rising sea levels. With recent scientific evidence suggesting that climate change is happening faster than previously thought, investment in research and a change in industry behaviour is long overdue.

Key findings of the report include:

recent natural disasters have revealed the inadequacy of capital and pricing models, so catastrophe models must be updated regularly to keep pace with the latest scientific evidence;

the industry must take a new approach to underwriting, looking ahead and factoring in climate change scenarios, rather than simply basing decisions on historical records – especially with extreme windstorm seasons set to continue;

insurers must prepare for the impact of climate change on asset values. Underwriting for profit will be crucial;

insurers must regularly review and communicate conditions of coverage in light of the impact of climate change; and

effective partnership with business and government will be key to mitigating risk.

Rolf Tolle, Lloyd’s Director, Franchise Performance said:

“Although it’s almost two decades since the UN recognised that climate change was a catastrophic threat to earth, it’s clear that the insurance industry has not taken catastrophe trends seriously enough. As an industry we must work together to understand and manage these new risks, and to change our behaviour.

“Today’s risk environment is changing and evolving – more rapidly than ever

Source: Canadian Insurance News Wire

Insurers to pay $50 million in Hollinger settlement

6/2/2006
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American International Group Inc. and Chubb Corp. may pay CD$50 million to cover a settlement involving a suit against past directors of Hollinger International Inc., Ontario Superior Court Judge Colin Campbell recently ruled.

The minority Hollinger shareholder Cardinal Capital Management LLC said it would accept the CD$50 million payment and in exchange drop its suit which accused directors of ignoring the alleged financial scandals of ex-CEO Conrad Black.

This proposed action would leave excess insurers Ace Ltd., Zurich Insurance Co. and Royal Insurance Plc responsible to provide the coverage for future defence costs of ex-Hollinger directors.

Judge Campbell says it is the primary insurers position that under the settlement they will be released from their obligations under their policies.

As a result, monies being paid in the settlement will no longer be available for use to cover defense costs of potential future actions taken against the directors.

Therefore, the obligation to pay for defence costs would be passed on to the excess insurers, which means that less money would be available from the excess insurers for liability payments.

All three excess insurers opposed the CD$50 million settlement.

"The material before the Court leads to the conclusion that if the settlement is not approved before this Court, the policy limits of the applicant primary insurers would be entirely paid out in defence costs of either the derivative action in Delaware or other litigation in which all the directors, both inside and outside, as well as Inc. and other related entities, are at risk," Judge Campbell said in a January 13, 2006 judgement.

The excess insurers would, according to Judge Campbell, rather see the funds under the proposed settlement being used to reduce the obligation they would otherwise have in respect of defence costs.

The settlement will not be finalized until it receives approval from a judge from Delaware, the location where Cardinal's lawsuit was filed.

Source: Canadian Underwriter

Active hurricane season anticipated, fewer land falls

5/31/2006
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The 2006 hurricane season is expected to see 17 named storms forming in the Atlantic basin but, according to Colorado State University's (CSU) forecast, fewer major hurricanes will make landfall on coastal regions compared to last year.

The U.S. Atlantic basin likely will experience another active hurricane CSU says that for the 2006 hurricane season, which begins on June 1 and ends Nov. 30, nine of the 17 storms will likely become hurricanes. The forecasting team at CSU continues to predict that and five of those nine hurricanes are expected to develop into intense or major hurricanes (Saffir/Simpson category 3-4-5) with sustained winds of 111 mph or greater.

"The Atlantic Ocean remains anomalously warm and neutral ENSO (El Nio - Southern Oscillation) conditions are observed in the tropical Pacific," Phil Klotzbach, member, CSU hurricane forecast team and lead author on the forecast, says. "We expect neutral ENSO conditions to be present during the upcoming hurricane season. When the tropical Atlantic is warm and neutral ENSO conditions are present, Atlantic basin hurricane activity is usually enhanced."

Klotzbach says that nature is causing the change in weather, not human-induced global warming. He explains that, "seasonal and monthly variations of sea surface temperature within individual storm basins show low correlations with monthly, seasonal and yearly variations of hurricane activity."

The CSU forecast predicts 2006 tropical cyclone activity will be 195% of the average season. By comparison, 2005 witnessed tropical cyclone activity that was about 275% of the average season.

"If the atmosphere and the ocean behave as they have in the past, we should have a very active season, but that doesn't necessarily translate into storms that produce as much destruction as last year," Professor William Gray, leader of the CSU hurricane forecast tea, says.

The current active period of Atlantic major hurricane activity is expected to continue for another 15 to 20 years. However, Gray says it is statistically unlikely that the coming 2006-2007 hurricane seasons, or those that follow, will have the number of major hurricane U.S. landfall events as occurred in 2004-2005.

The hurricane forecast team's says that the probabilities that a major hurricane will make landfall are: * An 82% chance that at least one major hurricane will make landfall on the U.S. coastline in 2006 * A 69% chance that a major hurricane will make landfall on the U.S. East Coast, including the Florida Peninsula * A 38% chance that a major hurricane will make landfall on the Gulf Coast from the Florida Panhandle west to Brownsville

"In any one season, most U.S. coastal areas will not feel the effects of a hurricane no matter how active a season," Klotzbach says. "The probability of landfall for any one location along the coast is very low. However, low landfall probability does not ensure that hurricanes will not come ashore, so coastal residents should always be prepared."

The team says it also predicts above-average major hurricane landfall risk in the Caribbean.

The team will issue seasonal updates of its 2006 Atlantic basin hurricane activity forecast on Aug. 3, Sept. 1 and Oct. 3. The report will include separate forecasts for each of those months.

Source: Canadian Underwriter

Hurricane Forecast Increases Importance Insurers Place on Catastrophe Risk Models, EQECAT Says

4/3/2006
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OAKLAND, Calif.--The widely accepted forecast of more frequent and severe hurricanes in the Atlantic Ocean, Caribbean Sea, and Gulf of Mexico for the next decade or more is increasing the importance that insurers, reinsurers, corporations, and government entities are placing on catastrophic risk models, Rick Clinton, president, EQECAT, Inc., the authority on extreme-risk modeling, has told clients in advance of the 2006 hurricane season which starts June 1.

The current forecast, coming after the industry's difficult 2004 and 2005 hurricane experience, is putting more pressure on companies to improve their understanding of and to aggressively manage their catastrophe risk, he said in a recent series of group and one-on-one client meetings.

"As a result, in this potentially much more volatile environment, insurers and others are increasingly and wisely moving to a multiple-model strategy, a plan we have long suggested," Mr. Clinton said.

He also disputed the comments by some that risk models in general are neither sophisticated nor accurate enough. "There has always been uncertainty in the modeling process, which we quantify and help our clients to understand. Therefore, what companies should be looking at is whether their model provides estimates that fall within an acceptable level of uncertainty. With this level of understanding, overall, EQECAT has received positive feedback on our model's performance from our clients."

Enhanced Modeling Capabilities Planned

"During the past two years the risk perception has changed, and will continue to going forward," said Mr. Clinton. "As the change in weather cycles evolve, so does the perception of risk and EQECAT will continue to take into consideration the underlying factors of those risks to enable our clients to manage their exposures," he said.

In addition to further upgrading EQECAT's hurricane modeling capabilities, Mr. Clinton said the company is nearing completion of plans for the release of other optimized modeling capabilities, supported by its innovative WORLDCATenterprise(TM) platform, to deal with several perils, including flood and earthquakes, as well as to measure the impact of perils on the offshore energy industry.

Source: BUSINESS WIRE

Manitobans most conscientious seatbelt wearers: study

3/28/2006
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Manitobans have become some of the most conscientious seatbelt users in the country, according to a Transport Canada survey.

Manitoba Public Insurance (MPI) responded to the survey results by saying it will not relax its efforts to convince all Manitobans they should use vehicle restraint systems properly.

"Certainly we thank and congratulate Manitobans for becoming more safety conscious, and we're pleased that Manitoba is now among the leading provinces for seatbelt use – with 90.3% buckling up in rural Manitoba and 92.4% in urban areas," MPI's vice president of corporate public affairs John Douglas said. "You have to wonder why there are even a few people who still don't use them, when there is so much dramatic proof that seatbelts save lives."

Douglas attributed Manitoba's rise in seatbelt use to a number of factors:

• In 2003 the provincial fine for not wearing a seatbelt jumped from $100 to $230. Two demerit points for infractions were imposed.
• New and continuing awareness initiatives are graphically depicting what can happen to an unrestrained occupant in a crash. In addition to running a new advertising campaign, MPI is touring the province to demonstrate its roll-over simulator, which shows first-hand how unbelted bodies can be ejected from a vehicle. More than 45,000 Manitobans saw the demonstrations last year.
• Rural community seatbelt checkstop programs are encouraging seatbelt use.
• Since 2003, RCMP and municipal forces have increased enforcement.

Conducting in September 2004, the Transport Canada survey is part of the National Occupant Restraint Program. The federal-provincial partnership aims to achieve a minimum rate of 95% in seatbelt usage and the proper use of child restraints by 2010.

"We believe Manitoba can reach and exceed that rate well before the target date," Douglas said. "We will be doing everything we can to make that happen. Greater safety pays dividends in lives and dollars, and there are few safety measures that are simpler and more effective than the proper use of seatbelts and child restraints."

About 130 people die on Manitoba roads each year, and about half of them are not wearing seatbelts at the time of the crash. "Clearly you have a much greater chance of being seriously injured or killed if you're among the 10% of Manitobans who don't wear seatbelts than you do if you're among the 90% who get the message," Douglas said.

Source: Canadian Underwriter

ICBC aids passengers of sunken BC ferry

3/22/2006
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ICBC representatives are on site in Prince Rupert, B.C. to aid ferry passengers and expedite the handling of all vehicle-related claims related to the sinking of the Queen of the North.

According to the Vancouver Sun, a Canadian Coast Guard vessel remained off B.C.'s north coast, scouring the choppy waters for fear there could yet be a missing passenger from a ferry that hit a rock and sank in the dead of night.

ICBC has been in contact with BC Ferries and has agreed to handle all vehicle-related claims. This will include expedited payments for the loss of the vehicle, as well as coverage for a replacement vehicle if required.

ICBC said in a release that its goal "is to have cheques in the customers' hands as soon as possible - immediately, or certainly within 24 hours."

The Sun reported the Queen of the North, sailing south on a 450-km overnight trip from Prince Rupert to Port Hardy along what's known as B.C.'s Inside Passage, hit the rock in choppy seas and high winds. It took about an hour for the boat to sink, allowing those aboard the ferry to get on the lifeboats and giving rescuers time to reach them.

The orderly rescue of dozens of people from the ferry's lifeboats – 42 crew members and 59 passengers – and the fact that no one was seriously injured is nothing short of miraculous, the president of B.C. Ferries, David Hahn, told the Sun.

"Anytime you have a major incident and you have no one hurt or killed in this type of thing, I think you always think it's a miracle," the Sun quotes Hahn as saying. "You always think, thank God, and you (are) thankful for the crew. That's what they're trained to do. They've done their job once again."

The Coast Guard is still searching the area because of a discrepancy about the number of passengers on the ferry. Some information suggested 101 passengers were on board, while others suggested 102.

Source: Canadian Underwriter

INSURERS TO PAY A RECORD $56.8 BILLION IN 2005 CATASTROPHE CLAIMS; FOURTH QUARTER’S $8.9 BILLION LOSS A 10-YEAR RECORD SAYS ISO PCS UNIT

1/30/2006
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U.S. property/casualty insurers are expected to pay homeowners and businesses a record $56.8 billion for 2005 insured property losses from 24 catastrophic events — more than twice the prior record set in 2004, when insurers paid $27.3 billion in catastrophe claims, according to preliminary estimates by ISO’s Property Claim Services (PCS) unit.

Five hurricanes — Katrina, Wilma, Rita, Ophelia and Dennis — accounted for $52.7 billion, nearly 93 percent of last year’s insured losses affecting nine states.

Policyholders in 39 states filed more than 4 million personal and commercial property and automobile claims. Five states accounted for more than 80 percent of those claims and almost half the dollar loss. They are:

• Louisiana, $27.2 billion
• Mississippi, $12.2 billion
• Florida, $9.9 billion
• Texas, $2.9 billion
• Alabama, $1.5 billion

Catastrophic activity in the fourth quarter was also unusual with Tropical Storm Zeta developing in late December, well beyond the official end of hurricane season, Nov. 30. Five fourth-quarter events triggered $8.9 billion in insured losses — the costliest fourth quarter on record in the past 10 years. Wilma’s $8.4 billion loss produced the lion’s share of the quarter’s steep tally.

Policyholders filed an estimated 1.1 million claims for the quarter. The previous record for fourth-quarter catastrophe losses in the past decade were $2.6 billion in 2003, driven by two Southern California wild land fires.

Estimated damage from catastrophes has doubled every year since 2002, while claim volume has increased steadily since 2000. Twelve catastrophes on the PCS’s “Top 20” list occurred during the past five-year period. A dramatic increase in the number and value of exposed properties in high-risk areas is a major contributor to increasing catastrophe losses.

Insured U.S. catastrophe losses since 1996:

Year, Number of Events, Losses
1996, 41, $ 7.4 billion
1997, 25, $ 2.6 billion
1998, 37, $10.1 billion
1999, 27, $ 8.3 billion
2000, 24, $ 4.6 billion
2001, 20, $26.5 billion
2002, 25, $ 5.9 billion
2003, 21, $12.9 billion
2004, 22, $27.3 billion
2005, 24, $56.8 billion

ISO’s PCS unit defines a catastrophe as an event within a particular territory that causes $25 million or more in insured property losses and affects a significant number of property and casualty policyholders and insurers. PCS estimates represent anticipated insured losses on an industry wide basis arising from catastrophes, reflecting the total insurance payment for personal and commercial property items, business interruption and additional living expenses. The estimates exclude loss adjustment expenses.

Source: Unknown

SUVs and pickups provide inadequate protection

1/9/2006
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The majority of sports utility vehicles and pickup trucks do not provide adequate protection for passengers in the instance of rear-end collisions, according to a crash test conducted by the Insurance Institute for Highway Safety.

The new crash test results, which put seats and head restrains in SUV and pickup truck models through a simulated rear-end crash at 20m/h, reveal that four out of every five new sport utility vehicles and pickup trucks do not protect against whiplash in rear-end collisions. The head restraints tested are in almost all SUVs and pickup trucks that are currently in production in the U.S.

Russ Rader, a spokesperson from the Insurance Institute for Highway Safety, recently told a CTV Canada AM audience that "overall, four out of five models of SUVs and pickups have inadequate head restraints and seats."

The tests concerning SUVs indicaetd that: the Ford Freestyle, Honda Pilot, Jeep Grand Cherokee, Land Rover LR3, Subaru Forester and the Volvo XC90 received a top score; the Ford Escape, Mazda Tribute and Mercury Mariner all scored the second-highest rating of acceptable; the marginal rating (second-to-worst ranking) was given to Buick Rendezvous; Chevrolet Equinox; Infiniti FX; Mercedes M Class; Mitsubishi Outlander; Nissan Pathfinder; Pontiac Torrent; Saturn Vue; and certain models of the Toyota Highlander; and, Poorly rated SUVs from the 2006 model year were the Acura MDX; BMW X3 and X5; Buick Rainier; Chevrolet TrailBlazer; GMC Envoy; Isuzu Ascender; Chrysler Pacifica; Ford Explorer; Mercury Mountaineer; Honda CR-V; Honda Element; Hyundai Santa Fe; Hyundai Tucson; Jeep Liberty; Kia Sorento; Kia Sportage; Lexus GX 470; Lexus RX 330; Nissan Xterra; Cadillac SRX; Jeep Wrangler; Mitsubishi Endeavor; Mitsubishi Montero; Suzuki Grand Vitara XL-7; Toyota 4Runner; and certain models of the Toyota Highlander.

The studies results on pickup trucks show that: the Ranger earned a good rating for 2005 models but its redesign for 2006, which made the head restraint shorter by nearly three inches, was criticized; Nissan Titan and versions of the Dodge Dakota and Toyota Tundra were deemed acceptable; the Chevrolet Colorado; GMC Canyon; Isuzu i280 and i350; Toyota Tacoma; and certain versions of the Toyota Tundra and Ford F-150 were all deemed marginal; and, the Chevrolet Silverado 1500, GMC Sierra 1500, Dodge Ram 1500, Ford Ranger, Mazda B Series, Nissan Frontier and versions of the Ford F-150 and Dodge Dakota were all given poor ratings.

The Insurance Institute for Highway Safety is calling on automakers to pay attention to the study, which received consumer public media attention when Radar released the study's results on air.

"Here in North America, the Insurance Institute for Highway Safety and the Insurance Corporation of British Columbia are rating seats in our markets and we hope that this pushes the automakers to make changes and make improvements."

The insurance institute conducted a similar study of cars in late 2004 and concluded that three-fourths of the restraints provided either poor or marginal protection against whiplash.

Source: Canadian Underwriter

10% dividend heading to Autopac customers

11/14/2005
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PUB ruling means $58 million rebate plus lower rates for most.

For the second time in five years, Manitobans will receive an Autopac rebate after the Public Utilities Board ordered a one-time dividend equalling 10 per cent of the premium they paid last year.

In its decision today, PUB ruled that Manitoba Public Insurance will rebate $58 million or $75 to $80 for the average passenger vehicle owner. In 2001, Manitoba Public Insurance paid out a 16.6 per cent rebate providing Manitoba vehicle owners with a cash payout of $80 million.

“While most insurance companies continue to levy rate increases, Manitoba Public Insurance has provided nearly a decade of rate stability and about $140 million in direct payments to Manitoba vehicle owners in the form of dividend payments,” said Marilyn McLaren, President and Chief Executive Officer of Manitoba Public Insurance.

For three out of five Manitobans, today’s ruling will provide a double bonus. As early as March 2006, all current vehicle owners will receive a refund cheque in the mail. Then, when Manitobans renew their insurance throughout the 2006/07 year, 58 per cent will pay less under the rates approved by the PUB.

Overall, 526,815 vehicle owners or 62 per cent will see their premiums decrease or stay the same starting March 1, 2006. Because of staggered renewal dates, some vehicle owners will not pay the new rates until February 2007. The PUB ruled:

• Premiums will go down for 57.55 per cent of vehicle owners (490,303 vehicles).
• Premiums will remain unchanged for 4.3 per cent of vehicle owners (36,512 vehicles).
• Premiums will increase for 38 per cent of vehicle owners (325,084 vehicles). For about 87 per cent or 283,115 of these vehicle owners, the increase will be less than $50.

Strong investment income, lower claims costs and strength in the corporation’s competitive lines of business paved the way for the one-time dividend, McLaren said.

“This payment to Manitobans can be made without putting the corporation’s financial strength at risk because our investment strategy has been so successful,” McLaren said. “The corporation has consistently had better returns than most Property and Casualty insurers in the country.

“One of the real benefits of the public insurance model is that premium payers directly benefit from investment income in the form of lower rates and in this case dividends.”

The rebate will be funded by the corporation’s Rate Stabilization Reserve, which is designed to cushion Autopac rates from unexpected cost fluctuations, and will therefore have no impact on the corporation’s future revenues.

Motorcycle rate increases have been held to an average of five per cent, compared to the 12.7 per cent average rate increase requested by the corporation.

The PUB ruling endorses current corporate initiatives such as the anti-theft immobilizer incentive program, the merger of driver and vehicle licencing functions and a number of operational reviews now underway.

“We pleased to see this validation of where the corporation is heading,” McLaren said.”

Source: Unknown

Wilma losses between $6 billion and $10 billion: RMS

10/25/2005
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Insured losses in the U.S. from Hurricane Wilma are likely to range between $6 million and $10 billion, according to Risk Management Solutions (RMS).

RMS says its estimate is based on current information about landfall location and wind speeds. It says damages will arise from onshore damage resulting from wind and coastal storm surge, business interruption and increased costs for materials and services needed for repairs (demand surge).

Hurricane Wilma made landfall at 6:30 am EDT on the southwest Florida coast near Cape Romano (20 miles west of Everglades City) as a Category 3 hurricane with maximum sustained winds of 120 mph and a central pressure of 950 mb.

"At landfall the storm was larger and more intense than forecast, with an eye diameter of over 70 miles and hurricane force winds extending out 90 miles," RMS noted. "The storm's large diameter and fast forward speed brought peak gusts of more than 100 mph to the Miami metropolitan region, which had escaped relatively unaffected by the string of hurricanes to affect Florida and the Gulf coast since August 2004.

"Due to the high density of property in Miami, even a low level of damage across the area could drive up insured losses."

Hurricane Wilma's track across Florida followed its devastating weekend landfall on Mexico's Yucatan coast, where severe damage to beachfront properties and hotels has been reported. This region has not been hit by a major hurricane since Hurricane Gilbert struck the area in 1988 as a Category 5 storm. In the years since Gilbert, the Yucatan Peninsula has seen a tremendous tourism development boom, which will result in considerable property losses from Wilma's impact, RMS says.

Source: Canadian Underwriter

Bird Flu pandemic could cause economic crisis

10/18/2005
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The bird flu pandemic that appears to be creeping westward could be catastrophic for Canada's manufacturing sector as it has the potential to instigate an economic crisis, according to the Conference Board of Canada.

In its report "Performance and Potential 2005-06: The World and Canada: Trends Reshaping Our Future," the Conference Board warns that Canada's efforts to protect itself from the strain will be futile.

However in an attempt to protect itself from the economic repercussions of the H5N 1 strain, chicken farmers in Nova Scotia have developed an emergency response plan. This plan integrates an insurance program to ensure that the poultry industry does not again see losses similar to the estimated $400 million dollars lost in 2004 when BC suffered an outbreak of H7N3 flu, which forced the elimination of 17 million birds.

The virus, is currently widespread in Asia with 60 people dying in the past two years, and has recently been identified in Romania, Turkey and Greece.

In a worst-case scenario, if the H5N 1 avian influenza virus reaches Canada up to 1.6 million Canadians could die.

Source: Canadian Underwriter

Canadian Insurers Launch Toll-Free National Insurance Crime TIPS Line

10/6/2005
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Canada's home, car and business insurers announced the launch of a national insurance crime TIPS line to make it easier for Canadians to report auto theft, insurance fraud, staged auto collisions and other crimes related to insurance. These are reportedly extremely costly crimes that are ...

This article can be found at: Insurance Journal

Source: Insurance Journal

A.M. Best gives Wawanesa Mutual top marks

10/4/2005
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Wawanesa Mutual Insurance Company, one of Canada's largest property and casualty insurers, has been ranked first among property and casualty insurance companies in Canada in terms of capital and surplus, according to ratings A.M. Best Co.

A.M. Best says it gave Wawanesa an 'A+ (Superior)' rating based on the insurer's superior level of capitalization, strong operating performance and leading market position in the Canadian property and casualty sector. The rating agency also praises Wawanesa's diversified book of business, sound risk management and experienced management team.

Gregg Hanson, president and CEO of Wawanesa, says of the rating: "We are particularly proud of Best's recognition of how our long-term relationships with brokers and our responsive customer service have played a key role in our success and stability.

"Since our start in 1896, when a group of Manitoba farmers came up with the idea of starting an insurance company owned by policyholders, we have maintained our focus on meeting the needs of our policyholders. This rating by the leading independent agency for the global insurance industry reflects the commitment and efforts of our staff and the more than 1,300 independent insurance brokers who distribute our products."

Wawanesa Mutual wrote $1.24 billion in net premiums in 2004 and its total business accounted for 3.9% of the Canadian market share, ranking it ninth out of 125 private Canadian insurance companies (excluding life and purely A&S companies).

Source: Canadian Underwriter

Total property damage from Katrina storm surge estimated

9/29/2005
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Property damage caused by water related to Hurricane Katrina will reach a total figure of approximately $44 billion, according to AIR Worldwide Corp.

"Katrina resulted in an unprecedented level of water damage," Dr. Jayanta Guin, vice president of research and modeling at AIR Worldwide, says. "While the flooding of New Orleans in the aftermath of the storm has garnered the most attention, we estimate that the devastating storm surge along the Gulf Coast, including southern Louisiana, was equally destructive."

AIR estimates that Katrina's storm surge will result in an additional $21.4 billion of damage in Louisiana (excluding New Orleans), Mississippi, Alabama and Florida. Storm surge, which is the water forced ashore by a hurricane, is highest to the right side of the storm's center. The force of the water can knock structures off their foundations, sometimes depositing them at considerable distance from their original locations.

"We conducted this analysis because there is a great deal of uncertainty among insurers as to how much of the total water damage from Katrina they will ultimately have to cover," Guin adds.

A breakdown of AIR's total estimated flood and surge losses reveals that storm surge losses are: US$22.6 billion in New Orleans; $16.2 billion in Louisiana; $4.4 billion in Mississippi; $793 million in Alabama; and, $32 million in Florida

Source: Canadian Underwriter