Category: Claims

The Co-operators General Insurance (TSE: CCS.PR.A) is showing signs of a rebound, announcing after tax net income of $267,000 for the third quarter 2001. This is a far cry from the same period last year, when the company reported a loss of $3.3 million.This translates to a loss per common share of $0.06 for the quarter, compared with $0.24 last year.However, the company is still reporting a net loss of $8.2 million for the first nine months of the year, compared with net income of $14.4 million last year. This represents a loss per share of $0.70, compared with earnings per share of $0.42 for the first nine months of 2000.Investment income is one part of the problem, down 10.5% from last year, to $103.4 million from $115.5 million.But gross written premiums were up for the quarter by 10.9%, to $444 million. This brings the nine-month total to $1.2 billion, up 7.1% from the first nine months of 2000.And the company’s combined ratio dropped to 112.7% from last year’s third quarter showing of 115.1%”Premium rate increases are starting to take effect and should improve year end results,” says The Co-operators president and CEO Terry Squire. However, he adds, “The weak investment markets continue to limit the opportunity for improvement in investment returns”.

British Columbia’s public insurer is reporting a net loss of $7 million for the third quarter of 2001, a sharp drop from last year’s net income of $70 million for the same period.And for the first nine months of the year, the Insurance Corporation of B.C. (ICBC) says it has lost $38 million, as compared with $312 million net income for the same time last year.Investment income decline is being blamed for the poor results, as is the lack of positive development from prior years’ claims. Overall investment income for the first nine months of 2001 was $286 million, compared to $528 million for the same period in 2000, with $230 million of the decrease attributable to lower bond and equity gains.Operating loss for ICBC’s insurance operations was actually lower in 2001 than last year. Claims costs were also down by about $3 million over the first nine months of 2001.The $38 million loss thus far is on target with the Corporation’s predicted yearend loss of $150 million, notes ICBC chair Nick Geer. And the $50 million restructuring cost predicted by the Corporation is not expected to increase.”With reduced expectations for investment incomeand with claims settlements now close to equaling the amount reserved, it is unlikely that prior years’ claims developments and investment income will compensate for rising costs, as they have in the past,” the ICBC notes.ICBC has applied for an increase in premiums next year, about 7.4% on average. Basic coverage will go up 6.6% and optional coverage 8.7% on average. Minimum deductibles will also go up, the Corporation reports.”For the last few years ICBC has been able to maintain a rate freeze primarily because of two factors – gains in investment income and favorable prior years’ adjustments,” Geer says. “We’ve now reached a point where rate changes can no longer be postponed, if ICBC’s operations are to break even.”

Just as U.S. regulators begin their investigation into Lloyd’s of London’s ability to pay claims resulting from the September 11 terrorist attacks, the company acknowledges it is among those on the hook for an airplane crash in New York.Early Monday morning, an American Airlines Airbus A-300 crash into homes in the Queen’s borough of New York, shortly after take-off from Kennedy International Airport. It is believed all 246 passengers and 9 crew members were killed, and several injuries have been reported from people on the ground. New sources report that several homes on the ground were damaged or destroyed as a result of the crash.Terrorism has not been blamed for the crash, although it has not been ruled out either. The flight was bound for Santo Domingo, Dominican Republic. All three New York airports were temporarily shut down following the crash.Lloyd’s is the first insurer to confirm that it insures American Airlines, although it offered no further comment.The event caps off what has been a disastrous year for airline insurance, one that has left airlines worldwide scrambling for cover. Although many countries, including Canada and the U.S. have offered temporary government-backed insurance to the airlines, these have been temporary measures.No other loss estimates have been made yet as a result of today’s crash.

Lloyd’s of London gained a last-minute reprieve from the National Association of Insurance Commissioners (NAIC) and the New York Insurance Department on its deadline for full payment of claims relating to the September 11 terrorist attacks.Lloyd’s had initially been given a deadline of November 15 by the insurance regulators to deposit in full the payment of claims. Lloyd’s has estimated its loss resulting from the World Trade Center (WTC) and four airliners at around US$5.36 billion, although a significant portion of this amount would presumably be covered by reinsurance. Lloyd’s is now expected to pay 60% of its claims’ amount of US$3.2 billion by November 15, and the remainder by next year March. “We are very pleased to have this matter clarified. This has always been a question of short-term liquidity, not solvency,” says Lloyd’s chairman Sax Riley.

In light of almost Cdn$3 billion (1.3 billion pounds) in losses from the U.S. terrorist attacks, Lloyd’s of London is making a cash call on members for $1.78 billion (780 million pounds). Money will be used to help pay claims following the attacks, in which Lloyd’s syndicates insured the World Trade Center and both U.S. airlines involved.Individual Lloyd’s members, or “names”, are being asked for $560 million (246 million pounds), while corporate members will provide the remainder. The members would have paid a cash call of some kind to cover losses from 1999, but the amount is substantially higher in light of the September 11 attacks.

A new study released by the Canadian Center for Policy Alternatives (CCPA) suggests privatizing British Columbia’s auto insurance system will be bad for consumers. “Allowing private firms to compete with ICBC in the provision of basic auto insurance will almost certainly result in a number of negative outcomes, including discriminatory rate setting, higher insurance premiums for hundreds of thousands of British Columbians, job loss, diminished investment in road safety and higher costs for the public treasury,” the CCPA writes in its report, “The Road Ahead”.The study points to numbers from the Consumers’ Association of Canada in B.C. suggesting drivers would face higher rates under privatized auto, as well as comments by the Automotive Retailers Association estimating 500 body shops would be out of business under full competition.The CCPA also suggests that the new Liberal government could find new costs landing on its doorstep, including medical and road safety expenditures.The Insurance Bureau of Canada (IBC) has come out strongly against the report, saying it is full of factual mistakes and calling it “an ideological hatchet job”. Specifically IBC argues that private insurers do contribute to health care costs and that older and rural drivers would not face higher rates in a fully competitive system.

Broker consolidator Vector Intermediaries (CDNX: VTE) is seeing its results continue to improve, if modestly, through the first half of 2001. Operating results were the best in Vector’s history and operating margins continue to improve, the company states in a press release.Before tax earnings for the period are $732,164, or $0.03 per share, compared with $425,722, or $0.04 per share, for the first half of 2000. However, revenue was down for the period, to $6,094,761, from $6,788,932 in 2000. And the company experienced a net loss for the period, to the tune of $710,761, or $0.06 per share. This is, however, an improvement on last year’s first -half loss of $1,268,806, or $0.14 per share.The company continues to state its desire to expand it operations, which currently include 11 offices in four provinces. It has also concentrated on its Internet offerings though its local brokerages and the national site, insurancebroker.ca.

Dear Editor,

Re: Linden Rees, “Ex Gratia” article (CU, June 2001).

In his very first paragraph, Mr. Rees refers to a claim that “may not be covered”. He later states that “highly dubious” claims should not be covered.

I beg to differ.

Insurers continually broaden coverages and reduce rates to obtain business. When times get tough some try to avoid claims payments. Mr. Rees appears to be of that persuasion.

If there is a doubt, I strongly believe that the insured should be given the benefit. Most, not all, of my insurers agree. This is not “ex gratia”. If a loss is clearly excluded a claim should be denied.

It is the responsibility of the broker to provide service to his client. This includes having dubious claims paid, and pointing out clear exclusions if they exist.

Yours truly,

Walter Seimens, president

Curriers Insurance Agencies Ltd.

Reorganization at Co-operators General Insurance Company (TSE: CCS.PR.A) has not yet begun to pay off in early 2001 results. The company, which has seen dismal results in the past several quarters, reports premiums are up, although the effect has yet to be seen on the bottom line.Net income is down for the second quarter of 2001 as compared with the same period last year, dropping to $11.5 million from $15.7 million. Investment income was a factor, falling to $30.6 million for the period from $37.4 million last year.The year-to-date results are similarly disappointing, with a net loss of $8.5 million reported for the first six months of the year, as compared with net income of $17.7 reported last year.Earnings per share are $0.43 for the quarter, down from $0.63 for the same period in 2000. And year-to-date the loss per common share is $0.64 compared with earnings of $0.66.The period did signal something of a rebound for the company, as both gross written and net earned premiums rose. Gross written premiums are up 7.3% for the quarter, to $445 million from $415 million last year. For the half-year, written premiums are up 5% over last year, to $766 million. Earned premiums tally at $315.3 million, compared with $296 million last year. The company also managed to improve its combined ratio, shaving it down to 103% from 103.7% in second-quarter 2000.

Following the sale of its North and South American reinsurance operations, Groupama has now put its U.K. insurance subsidiary up for bids. Earlier this year the French mutual, also known as Caise Centrale des Assurances Mutuelles Agricoles, announced the sale of Sorema S.A. and Sorema N.A. to Scor, boosting its share in Scor to more than 17%. At the time, Groupama cited the desire to focus on its European business.It comes as no surprise that Groupama is now trying to sell the U.K. multi-line insurance operations, Groupama Insurance Co. Ltd. and Groupama General Insurance Co. Ltd.. Both companies were recently placed on credit watch by rating agency Standard & Poor’s, who cited the belief that the operations would be sold in its assessment.In the rating, Standard & Poor’s notes that the companies’ capitalization was weakened following a reported loss of US$63.6 million in 2000. Groupama expects the sale to be completed by the end of the year.