Property and casualty insurance professionals should be prepared for a populist consumer backlash against the industry if they report good financial results after Canada’s most destructive NatCat season ever, one industry analyst predicts for 2025.
“The reality is, in Canada, even with $8.9 billion of losses [in 2024], Canadian companies have done, well — actually, better than in 2023 — and I think this is a discussion that is going to continue, both in Canada and the U.S.,” MSA Research president Nevina Kishun said at the Insurance Institute of Canada’s ‘Industry Trends’ webinar Thursday.
The Canadian P&C insurance industry handled more than 230,000 insurance claims in just 27 days when it responded to hail, wildfires and flood catastrophes in Alberta, Ontario and Quebec in July and August last year. That’s more than all of the claims combined in 2023.
Kishun did not cite any examples of specific companies reporting strong financial results in her presentation.
But coincidentally on Wednesday, Canada’s largest insurer, Intact Financial Corporation, announced a profitable combined ratio (claims plus operating expenses, divided by premiums) of 92.2% for 2024. IFC paid out $1.5 billion in NatCat claims last year, the company reported in an earnings call. Part of the reason for Intact’s profit, as the company reported, was due to the “rate actions” it’d taken over the year in response to escalating claims costs.
Intact was not alone in this, as the vast majority of Canadian P&C insurers raised rates to make up for higher claims costs in personal auto and home insurance lines.
Kishun observed industry profits are partly a byproduct of sound financial regulation in Canada, which requires insurers to have enough capital available to pay out claims to Canadians in times of need. But the industry needs to deliver this message to consumers, she said.
“I think, as an industry, it’s our opportunity to talk through the [industry’s] response…to help people get through the summer of 2024, to talk through the claims and support they were able to provide the Canadians, and how resilient our system actually is,” she said.
“This summer actually showed how all the regulations are actually working to really protect our industry and help to weather all the Canadian storms.”
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Populist backlash
Kishun noted populist consumer backlash against insurers is more pronounced in the United States than in Canada. She prefaced her remarks by playing a video clip of an interview between talk show host Jimmy Kimmel and U.S. comedian Bill Burr, who lost his home during the California wildfires.
With applause from the studio audience, Burr took a shot at the American insurance industry: “They’re talking about looting [the wildfire sites], but CNN and Fox News are not going to bring up the insurance companies that are just going to keep everybody’s premiums and still get themselves a bonus,” he says in the clip. “Free Luigi!”
Luigi Mangione, 26, was charged in connection with the Manhattan killing of UnitedHealthcare’s CEO Brian Thompson. The health insurance executive was shot dead from behind while walking to the company’s annual investor conference at a Hilton hotel in New York. Mangione pleaded not guilty. The case is ongoing.
Police have reportedly revealed the bullets used to kill Thompson were inscribed with the words “deny,” “defend,” and “depose,” a possible reference to strategies insurance companies use to deny claims.
Kishun said she heard some feedback while preparing her presentation that her examples of consumer sentiment were directed at U.S. health insurers, specifically, and did not apply to P&C. But she said consumers don’t always make that distinction regarding the insurance industry.
“I think the reality is, [and] you heard on the last clip [from] Bill Burr, they don’t see the difference between medical insurance and P&C insurance,” Kishun said. “Insurance, to them, is insurance.
“And my prediction for 2025 is [the continuation of] all of this profit versus people discussion. It’s not going to go away. We, as an industry, will have to address it with the people we talk to and the people we serve.”
Feature image courtesy of iStock.com/SIphotography
