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Mar. 17, 2004. 12:25 AM
$2.63 billion profit in '03, a record for insurance industry
Figures show rise of 675 per cent
After 6 years of `horrible' returns
EDMONTON―Canada's insurance industry posted a record net profit of $2.63 billion in 2003, Insurance Bureau of Canada figures show.
The results are about 675 per cent higher than 2002, injury lawyer Mark McCourt said Monday.
Last year "was a banner year for the Insurance Bureau of Canada, which not only successfully lobbied the (Ralph) Klein government to slash compensation payable to injured car crash victims, but also has now announced all-time record profits for the industry," McCourt said.
The previous profit record was set in 1997 when $2 billion was reaped.
Bureau spokesman Jim Rivait said the profits are spread across more than 200 companies operating in Canada and are from fire, home, life, auto and other policies sold.
"The average company net earning figure was approximately $13 million," the bureau said in a release.
"The industry's rate of return ... while up over last year's ... remains lower than reasonable profitability targets accepted by government regulators and lower than levels seen in other financial services."
Rivait said the industry's performance measures will change after Alberta's auto insurance reform package is fully in place.
That's expected to happen by this June.
Medicine Hat Tory MLA Rob Renner, who headed up an Alberta insurance reform review committee sparked by concern over skyrocketing premiums, said he's not concerned about insurance industry profits.
"We came to the conclusion the market was not operating effectively in a competitive marketplace, and it was necessary for government to step in and do some regulation," he said. "That, I think, is more critical and more important than worrying about if someone made a profit or not."
The Alberta government has passed its auto insurance reform package and is currently developing regulations, including a grid which will be used to set rates.
Renner said 80 per cent of motorists will pay less.
Alberta's New Democrat Leader Raj Pannu said the figures show insurance companies are not suffering financially.
"This news puts a lie to the claims of insurance company interests who say they must keep premiums high when in fact we know they don't need to because the profit margins are huge," he said.
But a sustainable healthy marketplace is no sure thing given continued uncertainties, especially in Ontario and Alberta, Rivait said.
Insurance companies have gone through six "horrible" years of returns and have finally had one good year, he added. If companies don't make some money, there will be no insurance services.
"The easy part is to say everyone gets cheap, lower premiums," he said. "The hard part is to say what you're going to do to balance that off."
Canadian Press
$2.63 billion profit in '03, a record for insurance industry
Figures show rise of 675 per cent
After 6 years of `horrible' returns
EDMONTON―Canada's insurance industry posted a record net profit of $2.63 billion in 2003, Insurance Bureau of Canada figures show.
The results are about 675 per cent higher than 2002, injury lawyer Mark McCourt said Monday.
Last year "was a banner year for the Insurance Bureau of Canada, which not only successfully lobbied the (Ralph) Klein government to slash compensation payable to injured car crash victims, but also has now announced all-time record profits for the industry," McCourt said.
The previous profit record was set in 1997 when $2 billion was reaped.
Bureau spokesman Jim Rivait said the profits are spread across more than 200 companies operating in Canada and are from fire, home, life, auto and other policies sold.
"The average company net earning figure was approximately $13 million," the bureau said in a release.
"The industry's rate of return ... while up over last year's ... remains lower than reasonable profitability targets accepted by government regulators and lower than levels seen in other financial services."
Rivait said the industry's performance measures will change after Alberta's auto insurance reform package is fully in place.
That's expected to happen by this June.
Medicine Hat Tory MLA Rob Renner, who headed up an Alberta insurance reform review committee sparked by concern over skyrocketing premiums, said he's not concerned about insurance industry profits.
"We came to the conclusion the market was not operating effectively in a competitive marketplace, and it was necessary for government to step in and do some regulation," he said. "That, I think, is more critical and more important than worrying about if someone made a profit or not."
The Alberta government has passed its auto insurance reform package and is currently developing regulations, including a grid which will be used to set rates.
Renner said 80 per cent of motorists will pay less.
Alberta's New Democrat Leader Raj Pannu said the figures show insurance companies are not suffering financially.
"This news puts a lie to the claims of insurance company interests who say they must keep premiums high when in fact we know they don't need to because the profit margins are huge," he said.
But a sustainable healthy marketplace is no sure thing given continued uncertainties, especially in Ontario and Alberta, Rivait said.
Insurance companies have gone through six "horrible" years of returns and have finally had one good year, he added. If companies don't make some money, there will be no insurance services.
"The easy part is to say everyone gets cheap, lower premiums," he said. "The hard part is to say what you're going to do to balance that off."
Canadian Press
