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Member, Beacon International Group, Ltd.
Canada's property/casualty sector is stable, but the market will continue to soften, according to a report from A.M. Best Co. Inc.
According to the rating agency, pricing is down across all major commercial lines. Rates will continue to fall due to strong capitalization and competition and despite harsh weather in 2007 and 2008, rising claims costs, volatile equity markets and dwindling investment returns, the report says.
Net underwriting income decreased 18% from 2006 to 2007, according to the report. Incurred claims are outpacing premiums, which grew only 1.1% in 2007.
Oldwick, N.J.-based Best reported that already in 2008, nine Canadian P/C firms have suffered downgrades in financial strength, compared with one in 2007, although upgrades are still outpacing downgrades.
As pricing continues to soften, firms are under more pressure to gain market share, making consolidation likely, the report says. Commercial property represented 14.5% of the Canadian P/C market in 2007.