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IBC Facts 2017 1

President’s message

When a wildfire swept through the northern Alberta city of Fort McMurray in May 2016, destroying or damaging 2,500 homes and buildings, and displacing almost 90,000 people, the devastation was a test for many. Residents were tested by the loss of their homes and businesses and the need to rebuild. For months, first responders were tested by a fire the size of Prince Edward Island that was so hot they nicknamed it “The Beast.”

The Fort McMurray disaster – the largest insured loss in Canada’s history – was also a test for Canada’s property and casualty (P&C) insurance industry.

Insurers are second responders. They arrive immediately after a disaster with cheques in hand to help their policyholders get through those first tough days. And in large-scale events, insurers work very closely with their policyholders and government stakeholders for months and even years.

Almost a year after the fire, with rebuilding well underway, the P&C insurance industry can be proud of its response as it continues to help Fort McMurray residents recover. The industry will remain on the ground, identifying and responding to issues until the community is back on its feet.

For Canadian insurers, 2016 is on record as the worst year ever for catastrophic losses (which are insured losses that total $25 million or more from a single event). The most recent tally is $5.03 billion, of which the Fort McMurray wildfire accounts for $3.7 billion.

Our changing climate is creating more weather extremes – more rain, more heat, more drought, more wind – and is pushing these losses ever higher.

In Canada and around the world, climate change is not a future threat but a present danger.

These numbers tell the story.

• The Fort McMurray wildfire reduced Canada’s GDP by almost half a percentage point in the second quarter of 2016.

• Canada’s parliamentary budget officer estimated that the cost of natural disasters, driven in large part by climate change, will be almost $1 billion annually by 2021.

• Globally, the average annual economic cost of weather disasters has increased sixfold since the 1980s.

Our companies, our customers and all Canadians are feeling the financial and emotional strain of our changing climate.

This is why Insurance Bureau of Canada (IBC) and P&C insurers continue to work with governments and all stakeholders to tackle the effects of climate change and to help Canadians prepare for emergencies. Many Canadian insurers now offer homeowners new overland flood protection products. As well, insurers are encouraging governments to employ better land-use planning, repair existing infrastructure and create new, green infrastructure to make communities more resilient.

P&C insurers are tackling another pocketbook issue, the cost of car insurance in some provinces, which continues to increase. There are encouraging signs that relief is on the way. In Ontario, the provincial government is working to create a new regulator with a mandate to focus on market conduct and innovation. The government has also committed to studying the reforms recommended in Fair Benefits Fairly Delivered, the report by David Marshall. The Alberta government has agreed to bring forward changes that can improve its system. In the Atlantic provinces, Newfoundland and Labrador and Nova Scotia are committed to reviews of their auto insurance systems.

When we work together with our customers and governments, we can affect significant change on issues that Canadians care about.

Don Forgeron President and CEO, Insurance Bureau of Canada

IBC Facts 2017 3

1

Canada’s P&C insurance industry, all sectors4 Industry at a glance 6 Premiums 8 Insurance dollar 9 Claims 10 Taxes and levies12 Operating expenses 13 Profit 16 Catastrophic losses 24 Regulation and regulatory issues

4 IBC Facts 2017

�� 42.4% of direct written premiums were for car insurance in 2016

�� Of its $170.2 billion in total assets, the P&C insurance industry had $111.3 billion in invested assets in 2016

�� In 2016, Canadian insurers wrote $53.4 billion in direct written premiums for insurance on consumers’ homes, cars and businesses

�� $9.0 billion – the amount the P&C insurance industry contributed in taxes and levies to federal and provincial governments in 2015

�� The P&C insurance industry employed 124,900 people across Canada in 2016

IBC helped recover stolen vehicles worth $28 million in 2016

Industry at a glance

IBC Facts 2017 5

�� Property claims as a percentage of total claims have risen significantly over the last decade

24.4%

39.3%

�� More than half of every dollar of premiums received by insurers is paid out in claims

• 56.6% - claims paid out to policyholders

• 21.5% - operating expenses including employee compensation

• 13.6% - taxes and levies

• 8.3% - profit margin

More than 203 private P&C insurers actively compete in Canada

6 IBC Facts 2017

Top 20 private P&C insurers by direct written premiums, 2016

Rank Company %1 Intact Group 15.782 Aviva Group 9.753 Desjardins Group 8.494 TD Insurance Group 5.785 Co-operators Group 5.416 The Wawanesa Mutual Insurance Company 5.367 Lloyd's Underwriters 5.328 RSA Group 5.309 Economical Group 3.96

10 Travelers Group 2.8511 Allstate Group 2.7112 Northbridge Group 2.6513 AIG Insurance Company of Canada 2.1014 Chubb Group 1.8615 Capitale Group 1.7516 Genworth Financial Mortgage Insurance

Company Canada1.45

17 Zurich Insurance Company Ltd. 1.3818 CAA Group 1.3519 The Guarantee Company of North America 0.9020 Green Shield Canada 0.86

Sources: IBC, MSA

The requirement to estimate future costs is a unique challenge in the insurance business. Most businesses can calculate the actual costs of producing and selling a product before the selling price is determined. However, when setting premiums, P&C insurance companies can only estimate the costs of the medical treatments, car repairs or house repairs they will have to pay in the future.

Consumers often find this confusing and are unsure about what a premium represents. Many think of their premiums as a bank account – it is there just for them in case of a loss. But that’s not how it works.

Insurance companies report premiums in two ways. Direct written premiums are the total amount of premiums that a P&C insurance company receives in one year. Net written premiums are direct written premium amounts plus reinsurance written premium amounts minus reinsurance ceded premium amounts.

There are more than 203 private P&C insurers actively competing in Canada to sell insurance policies on homes, cars and businesses.

In 2016, private Canadian insurers wrote $53.4 billion in direct written premiums ($48.7 billion in net written premiums) for insurance on consumers’ homes, cars and businesses.

Premiums

Insurance premiums are determined based on risk. Insurers consider the likelihood of a customer (or a group of customers with the same set of circumstances) making a claim, and how much those claims will likely cost. The price for premiums is based, in part, on an insurer’s best estimate of the amount it will be required to pay out in claims on the policies it wrote in any given year. Insurers pool the premiums of their many policyholders to cover the losses claimed by the few in that year. Along with covering claim costs, premiums are calculated to cover taxes, operating expenses and expected profits.

IBC Facts 2017 7

Net written premiums (NWP) in $000,000, 1993 to 2016

Auto NWPPersonal

property NWPCommercial

property NWP Liability NWP Other NWP Total NWP1993 8,158 2,803 2,062 1,298 918 15,239

1994 8,697 3,042 2,337 1,430 975 16,482

1995 9,403 3,163 2,553 1,694 1,258 18,071

1996 9,597 3,246 2,658 1,867 1,202 18,570

1997 9,553 3,281 2,711 1,878 1,185 18,608

1998 9,686 3,383 2,469 1,823 1,198 18,559

1999 9,839 3,293 2,434 1,846 1,315 18,728

2000 10,705 3,429 2,591 1,982 1,471 20,178

2001 11,281 3,481 2,768 2,194 1,519 21,242

2002 13,150 3,971 3,909 3,145 3,333 27,507

2003 15,781 4,452 4,518 4,081 2,581 31,413

2004 16,415 5,079 4,802 4,357 2,622 33,275

2005 16,430 5,315 4,820 4,600 2,698 33,864

2006 16,590 5,621 4,985 4,826 2,943 34,964

2007 16,758 6,033 4,997 4,766 3,540 36,095

2008 17,140 6,495 5,001 4,624 3,438 36,698

2009 18,126 7,013 5,313 4,667 3,068 38,187

2010 18,977 7,598 5,568 4,726 3,416 40,285

2011 20,239 8,192 6,014 4,817 3,533 42,794

2012 20,690 8,565 6,136 4,502 3,758 43,653

2013 21,089 9,024 6,339 4,731 3,823 45,007

2014 21,295 9,791 6,621 4,781 4,143 46,632

2015 20,630 10,187 6,656 4,988 4,547 47,009

2016 21,563 10,798 6,789 4,969 4,557 48,676

Sources: IBC, MSA, SCOR, AMF

Direct written premiums (DWP) by line, 2016

LineDWP in

$000,000

DWP as % of total

businessTotal auto 22,650 42.4 Auto - private passenger 18,769 35.1Personal property 11,739 22.0Commercial property 7,523 14.1Liability 5,969 11.2Specialized 4,179 7.8Accident and sickness 1,360 2.5Total business 53,418 100.0


Net written premiums (NWP) by line, 2016

LineNWP in

$000,000

NWP as % of total

businessTotal auto 21,563 44.3 Auto - private passenger 17,859 36.7Personal property 10,798 22.2Commercial property 6,789 13.9Liability 4,969 10.2Specialized 3,555 7.3Accident and sickness 1,002 2.1Total business 48,676 100.0


Of the $48.7 billion in net written premiums, 44.3% was for one line of business: automobile, including commercial vehicle insurance. (Figures do not include government-owned auto insurers in British Columbia, Saskatchewan, Manitoba and Quebec, which exclusively provide the compulsory component of auto insurance in those provinces.) Personal property, commercial property and liability made up most of the rest.

Specialized lines of insurance, such as boiler and machinery, marine and aircraft, and surety and fidelity, make up about 7.3% of the business. The smallest portion of the business is accident and sickness insurance, which a few P&C insurance companies sell. Most of this type of insurance is sold by life and health insurers.

8 IBC Facts 2017

Insurance dollar

�� The “Insurance Dollar” graphic shows how insurers spent each dollar of revenue averaged over seven years, from 2010 to 2016. More than half of every dollar received is paid out in claimsSources: IBC, MSA

• 56.6% - claims paid out to policyholders

• 21.5% - operating expenses including employee compensation

• 13.6% - taxes and levies

• 8.3% - profit margin

IBC Facts 2017 9

Net claims incurred (NCI) in $000,000, 1993 to 2016Auto NCI Personal property NCI Commercial property NCI Liability NCI Other NCI Total NCI

1993 6,420 1,974 1,430 1,004 661 11,490 1994 6,892 1,955 1,493 1,159 545 12,043 1995 7,342 2,003 1,504 1,218 773 12,840 1996 7,034 2,301 1,665 1,449 761 13,210 1997 7,221 2,112 1,838 1,406 613 13,190 1998 7,185 2,523 2,089 1,275 696 13,768 1999 7,475 2,152 1,758 1,438 659 13,483 2000 8,443 2,286 1,847 1,430 784 14,790 2001 9,431 2,316 2,031 1,495 887 16,161 2002 10,844 2,352 2,195 2,085 2,019 19,494 2003 12,028 2,574 2,161 2,632 993 20,388 2004 11,081 2,921 2,033 3,263 864 20,161 2005 10,626 3,570 3,356 3,071 944 21,568 2006 10,968 3,556 2,173 2,577 1,052 20,326 2007 11,753 3,842 2,589 2,642 990 21,817 2008 12,997 4,720 3,157 2,726 1,404 25,003 2009 13,472 5,071 3,454 2,878 1,464 26,338 2010 15,205 4,566 3,276 2,766 1,475 27,288 2011 14,607 5,336 4,087 2,977 1,560 28,567 2012 14,731 5,013 3,981 2,615 1,479 27,817 2013 15,125 6,161 4,699 2,486 1,650 30,120 2014 15,835 6,045 3,955 2,526 1,970 30,330 2015 15,277 5,489 3,797 3,106 1,761 29,431 2016 15,450 6,339 5,570 2,973 1,710 32,043


Net claims incurred (NCI) by line, 2016Line of business NCI in $000,000 NCI as % of total businessTotal auto 15,450 48.2 Auto - private passenger 13,100 40.9Personal property 6,339 19.8Commercial property 5,570 17.4Liability 2,973 9.3Specialized 1,074 3.4Accident and sickness 636 2.0Total business 32,043 100.0

Sources: IBC, MSA

In 2016, Canadian P&C insurers paid out $32.0 billion, or 63%, of insurance company revenues in claims. A note about terminology in the chart below: Net claims incurred are the total claims cost incurred in the period less any share to be paid by reinsurers.

Claims

10 IBC Facts 2017

The main taxes and levies applied to the P&C insurance industry are:

• Retail sales tax on claims and expenses. The P&C insurance industry paid an estimated $2.17 billion in goods and services tax (GST) and provincial sales tax (PST/QST) applicable to P&C insurance claims. An additional $458 million in sales taxes related to general and administrative expenses was incurred as part of daily operations. Being a GST/HST exempt industry means these costs are unrecoverable through input tax credits.

• Insurance premium tax. Provinces apply this tax, which is included in premiums, at different rates on different insurance products. Some jurisdictions have combined this tax with a fire tax. The fire tax is collected by some provincial governments to be disbursed to municipalities to support fire services.

• Retail sales tax on premiums. This is a provincial sales tax collected from policyholders in Manitoba, Ontario and Quebec. On July 1, 2016, Newfoundland and Labrador also applied a 15% RST on P&C insurance products.

• Health care levy. This levy is paid to most provincial governments to support the health care system, particularly to pay the public health system costs for victims of automobile collisions. Health care levies are included in the industry’s total tax contribution because they are a mandatory payment.

Excluding income taxes and the portion of payroll taxes remitted to governments on behalf of employees, the remaining taxes and levies accounted for over $6.5 billion or

Federal and provincial taxes and levies payable in $000,000, 2015Income taxes 1,267.5 Payroll taxes 1,482.2 Realty and business taxes 34.2 Transaction taxes

GST on claims* 903.6 PST/QST on claims* 1,270.8 Sales tax on operating expenses 457.7

RST on premiums (Man., Ont., Que.) 1,593.7 Insurance premium taxes 1,661.6

Transaction subtotal 5,887.4 Total taxes 8,671.3 Health levies 322.8 Total 8,994.1

*Harmonized sales tax (HST) is allocated into the appropriate component

Source: IBC

73% of the total tax contribution. The impact of these taxes on premiums varies depending on the insurance product. On a Canada-wide basis, these taxes account for 14.6% of the premium for personal property insurance, 13.7% of the premium for private passenger auto insurance (includes health care levies), 11.2% of the premium for commercial liability insurance and 10.2% of the premium for commercial property insurance.

Taxes and levies

Each year, the P&C insurance industry makes significant tax contributions to government tax revenues. In 2015, Canadian P&C insurers contributed taxes and levies totalling $9.0 billion to federal and provincial governments. About 86% ($7.7 billion) of the industry’s total tax contribution was incurred through the insurance supply chain and was paid regardless of the industry’s bottom line, while only 14% ($1.3 billion) was paid in income taxes.

IBC Facts 2017 11

Provincial premium, premium sales and premium fire tax rates, as of April 1, 2017Premium tax

rate (%)Premium sales

tax rate (%)Premium fire

tax rate (%)Alberta 4.00 - - British Columbia (auto and property insurance) 4.40 - - British Columbia (excluding auto and property) 4.00 - - Manitoba 3.00 8.00 1.25New Brunswick* 3.00 - 1.00Newfoundland and Labrador 5.00 15.00 - Northwest Territories 3.00 - 1.00Nova Scotia 4.00 - 1.25Nunavut 3.00 - 1.00Ontario (auto insurance) 3.00 - - Ontario (property insurance) 3.50 8.00 - Ontario (excluding property and auto) 3.00 8.00 - Prince Edward Island 4.00 - Quebec** 3.48 9.00 - Saskatchewan (auto insurance)*** 5.00 6.00 - Saskatchewan (hail insurance)*** 3.00 6.00 - Saskatchewan (excluding auto and hail)*** 4.00 6.00 1.00Yukon* 2.00 - 1.00

* In New Brunswick and Yukon, the fire tax applies on property and auto fire risks.** Insurance premium tax rates include a surcharge and a compensation tax. Quebec has extended the application periods of the surcharge of 0.18% to March 31, 2022 and the

compensation tax of 0.30% to March 31, 2024.*** Starting July 1, 2017, the 6% PST will apply to all insurance as defined in the Saskatchewan Insurance Act.

Source: IBC

12 IBC Facts 2017

Average weekly wage compared tobenchmark industries, 2016Mining and quarrying (except oil and gas) 1,716.9 Professional, scientific & tech. services 1,316.9 Information & cultural industries 1,305.3 Insurance carriers & related activities 1,234.2 Public administration 1,232.5 Credit intermediation 1,149.3 Manufacturing 1,088.9 Hospitals 1,060.4 Educational services 1,016.5 All industries 956.5 Retail trade 561.9 Accommodation & food service 370.7

Source: Statistics Canada Table 281-0027

Employee compensation is the largest operating expense. In 2016, the P&C insurance industry employed 124,900 people across Canada.

Compensation levels in the industry are relatively high compared with most other sectors in the economy. The average weekly salary in 2016 was $1,234. This reflects the advanced skill mix that employees in the P&C insurance industry possess.

Employment in the insurance industry as a whole (which includes life, health and medical, and P&C) grew by 11% between 2010 and 2016, according to Statistics Canada.

Operating expenses

Operating expenses for P&C insurers include facility costs, information technology, market research and employee compensation.

IBC Facts 2017 13

Of its $170.2 billion in total assets, the P&C insurance industry has $111.3 billion in invested assets. This makes the Canadian P&C insurance industry a major stakeholder and investor in the national economy. P&C insurers invest mainly in domestic government and corporate bonds, and in preferred and common stocks. These investments produce a steady flow of income and balance the more variable income from the underwriting side of the business, which tends to fluctuate from year to year.

Investments in $000,000 as of December 31, 2016*Bonds Shares Mortgages Real estate Term deposits Other Total 75,999 11,607 1,219 243 4,561 17,687 111,316

68.3% 10.4% 1.1% 0.2% 4.1% 15.9% 100.0%* As per the latest OSFI regulatory filing forms, which came into effect Q4 2016

Sources: IBC, MSA

In 2016, underwriting posted gains for the 14th consecutive year. The 2016 net underwriting income was $489 million. Before 2003, underwriting posted losses for 24 years in a row.

On investment, 2016 was a year of relatively low returns of 2.7%. Return on investment moves in lockstep with the yields for 3- and 5-year Government of Canada bonds, which have fallen for the last two decades. Investment income for 2016 was $3.0 billion.

The P&C insurance industry is highly regulated by governments and is required by law to invest its assets prudently. More than 68% of invested assets are placed in bonds.

Profit

Profit or return on equity in the P&C insurance industry is cyclical. It has fluctuated around an average of 10.5% since 1975. The 2016 industry return on equity was 6.0%.

14 IBC Facts 2017

Return on equity, return on investment and underwriting ratios, 1993 to 2016

Return on equity *Return on

investment Earned loss ratioOperating

expense ratio Combined ratio1993 9.5% 10.7% 77.1% 32.8% 109.9%1994 6.8% 8.0% 75.7% 31.3% 107.0%1995 11.7% 9.1% 73.3% 30.8% 104.1%1996 13.6% 10.3% 72.7% 30.7% 103.4%1997 13.1% 10.4% 71.4% 31.2% 102.6%1998 6.8% 8.5% 74.9% 32.9% 107.8%1999 6.5% 7.3% 72.6% 33.2% 105.9%2000 6.3% 9.0% 75.9% 32.7% 108.7%2001 2.6% 7.5% 80.0% 31.0% 111.0%2002 1.7% 5.4% 76.9% 28.9% 105.8%2003 11.6% 6.2% 69.9% 28.6% 98.4%2004 18.1% 5.6% 62.7% 28.2% 91.0%2005 17.2% 5.9% 64.7% 28.7% 93.4%2006 16.9% 5.9% 59.5% 28.1% 87.5%2007 14.1% 5.5% 62.5% 28.5% 91.0%2008 6.0% 3.9% 70.3% 30.0% 100.3%2009 6.9% 4.2% 69.5% 30.0% 99.6%2010 7.6% 4.3% 69.1% 30.2% 99.4%2011 8.0% 4.2% 68.2% 30.3% 98.4%2012 10.8% 3.9% 64.7% 30.6% 95.3%2013 6.9% 3.1% 68.1% 30.8% 98.9%2014 9.9% 3.9% 66.6% 31.0% 97.6%2015 10.0% 3.3% 63.5% 31.4% 94.9%2016 6.0% **2.7% 67.6% 31.8% 99.4%

* Excluding Lloyd’s** As per the latest OSFI regulatory filing forms, which came into effect Q4 2016


IBC Facts 2017 15

Return on investment (ROI) compared with Government of Canada bond yield, 1989 to 2016 (%)

Sources: IBC, MSA, Bank of Canada

4

12

8

01989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

P&C ROI

Yield for 3–5 yearGovernment of Canada bonds

Return on equity (ROE), 1975 to 2016 (%)

11.2 9.9 8.3

5

10

15

20

01975 1980 1985 1990 1995 2000 2005 2010 2016

Average ROE 10.5

Excluding Lloyd’s Sources: IBC, MSA

0.61

16 IBC Facts 2017

Catastrophic losses in Canada in $000,000,000, 1983 to 2016

Loss + Loss Adjustment Expenses in 2016 dollarsEstimated Trend Line

Source: IBC, PCS Canada, CatIQ, Swiss re, Munich Re, Deloitte

1.0

2.0

4.0

5.0

6.0

3.0

01983 1985 1990 1995 2000 2005 2010 2015

In 2016, catastrophic losses accounted for approximately $5.03 billion, which were the highest ever; of the $5.03 billion, $3.7 billion were a result of the Fort McMurray wildfire. The wildfire that occurred in May 2016 forced the evacuation of almost 90,000 people from Fort McMurray and surrounding communities. The fire destroyed or damaged 2,500 homes and buildings and thousands of vehicles and resulted in almost 49,000 claims in total.

Before 2016, the year 2013 was the record-breaker for catastrophic losses, when insurers paid out more than $3.4 billion, including $1.8 billion as a result of the floods in southern Alberta and around $1 billion as a result of a summer storm and flooding in Toronto. As well, at the end of 2013, a massive winter storm hit southern Ontario and parts of Eastern Canada.

Another record year for insured losses was 1998, the year that an ice storm occurred in Quebec and Ontario that included six days of freezing rain, month-long power outages and $2.1 billion in insured losses.

Milestone losses of the past decade include the hailstorms in Alberta during the summer of 2014 that cost insurers $550 million in insured losses. They also include the Slave Lake fire that ravaged a remote area of Alberta, causing $750 million in insured losses in the spring of 2011, and the Toronto rains of 2005 that generated $708 million in claims.

(All figures in this section are in 2016 dollars. For catastrophic losses plus loss adjustment expenses, see chart next page.)

Insured losses for a given disaster are deemed catastrophic when they total $25 million or more. Catastrophic losses for a year are the sum total of insured losses from these natural disasters. Catastrophic losses due to natural disasters have increased dramatically over the last decade.

Catastrophic losses

IBC Facts 2017 17

The table below shows the steady increase in the number and cost of catastrophic losses in Canada. This is not a Canada-only phenomenon; it is part of a worldwide trend.

The table includes insured losses by event and annual totals from 1983 to 2008. From 2009 on, it sets out insured losses for the two largest events in the year and annual totals.

The figures are reported by Property Claim Services Canada (PCS Canada), which tracks insured losses arising from catastrophic events in Canada, and Catastrophe Indices and Quantification Inc. (CatIQ) as indicated at the end of the table. Insured losses for all events are available through subscription to PCS Canada and CatIQ.

Catastrophic losses by event in $000, 1983 to 2016

Date and place Event type Lossplus loss adjustmentexpenses

Lossplus loss adjustmentexpenses in 2016 dollars

1983July 9, Saskatchewan Storm 16,385 36,211 Aug. 3, Edmonton AB Storm 22,060 48,752 Total 1983 38,445 84,963

1984 April 30, Bruce County ON Wind 39,066 82,774

Total 1984 39,066 82,774

1985May 30, Leamington ON Storm 16,390 33,404 May 31, Barrie ON Tornado 83,922 171,041 Total 1985 100,312 204,445

1986May 29, Montreal QC Hail 45,473 89,005 Total 1986 45,473 89,005

1987May 29, Montreal QC Hail 24,891 46,657 July 14, Montreal QC Storm 44,678 83,747 July 31, Edmonton AB Tornado 148,377 278,126 Total 1987 217,946 408,529

1988June 7, Medicine Hat AB Tornado 50,027 90,217 July 6, Slave Lake AB Flooding 21,500 38,772 Aug. 16, Calgary AB Hail 37,127 66,954 Total 1988 108,654 195,943

1989July 20, Harrow ON Flooding 13,807 23,701 Total 1989 13,807 23,701

1990July 9, Calgary AB Hail 16,279 26,661 Total 1990 16,279 26,661

1991March 27–28, Sarnia ON Tornado 25,407 39,399 July 3, Red Deer AB Storm 28,202 43,734 Aug. 27, Maskinongé QC Tornado 17,667 27,397 Sept. 7, Calgary AB Hail 342,745 531,503 Nov. 30, Ontario Wind 5,429 8,419 Total 1991 419,450 650,451

18 IBC Facts 2017



1992July 31, Calgary AB Hail 22,078 33,748 July 31, Toronto ON Flooding 4,898 7,487 Aug. 28, Alberta Hail 5,263 8,045 Aug. 28, Elmira and Aurora ON Flooding 4,348 6,646 Sept. 1, Alberta Hail 7,421 11,344 Oct. 6–7, Avalon NL Wind 8,216 12,559 Nov. 12–13, southern Ontario Wind 36,437 55,697 Nov. 12–13, Quebec Wind 12,056 18,428 Total 1992 100,717 153,953

1993March 13–14, Quebec Storm 18,447 27,671 July 25–Aug.14, Winnipeg MB Flooding 184,837 277,256 July 29–30, Alberta Hail 8,116 12,174 July 29, Saskatchewan Flooding 5,383 8,075 July 29–30, Quebec Flooding 7,624 11,436 Total 1993 224,407 336,611

1994Jan. 16–17, southern Ontario Flooding 13,145 19,694 Jan. 28, southern Ontario Storm 6,250 9,364 May 18, southern Manitoba Storm 8,260 12,376 May 22, Saskatchewan Storm 8,666 12,984 June 18, southern Alberta Hail 8,263 12,380 Aug. 4, Salmon Arm BC Storm 10,225 15,320 Aug. 4, Aylmer QC Tornado 6,911 10,354 Aug. 27, southern Manitoba Hail 8,112 12,154 Aug. 28, southern Ontario Storm 7,219 10,816 Total 1994 77,051 115,442

1995June 6–9, Calgary AB Flooding 20,764 30,435

July 4, Edmonton AB Hail 14,698 21,544

July 10, southern Alberta Hail 26,389 38,680

July 13–15, southern Ontario Storm 53,439 78,328

July 17, Calgary AB Hail 52,304 76,665

July 30, southern Manitoba Storm 8,468 12,412

Aug. 26, Regina SK Storm 12,294 18,020

Oct. 5–6, Hamilton ON Storm 16,325 23,928

Total 1995 204,681 300,012

1996July 16, Winnipeg MB Flooding/hail 146,825 212,062

July 16–18, Calgary AB Hail 119,091 172,005

July 24–25, Calgary AB Hail 85,222 123,088

July 19–20, Saguenay QC Flooding 207,159 299,204

IBC Facts 2017 19



July 23, Outaouais QC Wind/hail 1,571 2,269

Aug. 8, Ottawa ON Flooding 20,257 29,258

Aug. 8, Outaouais and Estrie QC Flooding 7,882 11,384

Nov. 9, Montreal and Quebec City QC Flooding 76,040 109,826

Total 1996 664,047 959,096

1997Feb. 27, Niagara Peninsula ON Wind 23,776 33,770

April 6–7, Sudbury ON Flooding 20,558 29,200

July 14–15, Chambly QC Flooding 29,865 42,419

Total 1997 74,199 105,389

1998Jan., southern Quebec Ice storm 1,384,100 1,946,533 Jan., eastern Ontario Ice storm 170,000 239,080 Jan., southern New Brunswick Ice storm 20,000 28,127 July 4–9, Calgary AB Hail 69,742 98,082 Sept. 26–27, Niagara Peninsula ON Wind 63,403 89,167 Total 1998 1,707,245 2,367,329

1999Jan., southern Ontario Snowstorm 120,021 165,885 June 5, Drummondville QC Hail 20,555 28,410 July 5–6, Quebec Wind 43,321 59,875 July 28, Atlantic provinces Flooding 15,756 21,777 Sept. 22, Atlantic provinces Flooding 15,648 21,628 Total 1999 215,301 297,574

2000May 12, southern Ontario Storm 128,121 172,440 July 7, southern Manitoba Storm 18,559 24,979 July 14, Pine Lake AB Tornado 17,916 24,113 Aug. 9, Calgary AB Storm 28,058 37,764 Oct. 30, Sydney NS Flooding 4,010 5,397 Dec. 17, Atlantic provinces Wind 19,756 26,590 Total 2000 216,420 291,282

2001Feb. 1, Atlantic provinces Snowstorm 13,746 18,047 Feb. 8, southern Ontario Storm 54,078 70,998 Feb. 8, Quebec Storm 53,843 70,690 July 13, Alberta Storm 25,513 33,496 July 28, Edmonton, AB Storm 23,902 31,381 Sept. 19, Atlantic provinces Flooding 6,362 8,353 Dec. 14, southwestern British Columbia Wind 27,035 35,494 Total 2001 204,480 268,458

20 IBC Facts 2017



2002Jan. 31, southern Ontario Wind 34,508 44,308 March 9, Ontario Wind 110,989 142,510 June 8, southern Alberta Flooding 42,828 54,991 June 10, southern Ontario Storm 53,943 69,263 July 26, southwestern Ontario Storm 60,060 77,117 Total 2002 302,327 388,188

2003March 30–April 1, New Brunswick Flooding 4,695 5,864 March 30–April 1, Newfoundland and Labrador Flooding 711 888 March 30–April 1, Prince Edward Island Flooding 628 784 March 30–April 1, Nova Scotia Flooding 18,557 23,178 Aug. 11–12, Alberta Wind/hail 33,565 41,924 Aug. 11–12, Saskatchewan Wind/hail 29,055 36,290 Summer, British Columbia Forest fires 200,000 249,805 Sept. 28–29, Prince Edward Island Hurricane 6,665 8,325 Sept. 28–29, Nova Scotia Hurricane 132,671 165,710 Total 2003 426,548 532,770

2004July 2–11, Edmonton AB Hail 166,000 203,576 July 15, Calgary AB Hail 21,500 26,367 July 15, Peterborough ON Flooding 87,303 107,065 Sept. 9, eastern Ontario Rainstorm 57,600 70,638 Total 2004 332,403 407,646

2005June 6–8 and June 17–19, Alberta Flooding 300,000 360,000 June 20–30 and July 1–2, Manitoba Flooding 60,000 72,000 July 5 and Sept. 26, Quebec Rainstorm 57,000 68,400 Aug. 19, Ontario Hail/tornadoes/wind 625,400 750,480 Total 2005 1,042,400 1,250,880

2006Feb. 6, British Columbia Storm 6,406 7,539 Aug. 10, Alberta Hail 13,593 15,998 Sept. 24, Greater Toronto Area ON Wind/hail 4,628 5,447 Nov.15–Dec. 15, British Columbia Storm 133,086 156,629 Total 2006 157,713 185,613

2007Jan. 5, British Columbia Storm 16,235 18,696 June 5, Alberta Storm 44,621 51,384 June 22–24, Manitoba Storm 17,607 20,276 Summer, Manitoba Storms 47,400 54,584 July 7, Alberta Forest fires 7,376 8,494 July 28–29, Alberta Hail 16,581 19,094 Aug. 1, Newfoundland and Labrador Wind 6,039 6,954 Total 2007 155,859 179,482

IBC Facts 2017 21



2008Jan. 9, Ontario Storm 28,017 31,528

April/May, New Brunswick Flooding 8,010 9,014

June 10, several regions in Quebec Hail 125,000 140,666

July 1, Lethbridge AB Windstorm/hail 20,500 23,069

July 9, Swift Current SK Hail/windstorm/lightning/water

Aug. 8, Red Deer AB Hail/windstorm/lightning/water

Sept., Saskatchewan Hail 132,000 148,543

Dec. 21, Vancouver BC Winter storm

Total 2008 446,460 502,414

2009Jan 6–8, Fraser Valley BC Flooding/waterFeb. 11–13, Ontario Flooding/ice/snow/windApril 25–27, Ontario Hail/tornadoes/windJuly 11–13, Hamilton and Ottawa ON, Montreal and Mirabel QC Hail/tornadoes/windJuly 24–28, Ontario Flooding/wind 227,900 255,790 Aug. 1–3, Alberta Hail/wind 376,300 422,351 Aug. 13–15, Manitoba Hail/windAug. 20, southern Ontario Hail/tornadoes/windAug. 23, New Brunswick and Newfoundland and Labrador Flooding/hurricane/wind

(Hurricane Bill)Aug. 29, New Brunswick, Newfoundland and Labrador, and Quebec

Flooding/tropical storm/wind (Tropical Storm Danny)

Total 2009 1,032,782 1,159,171

2010March 13, Toronto and Hamilton ON Flooding/windMay 28, Winnipeg MB Flooding/waterJune 5–6, Leamington and Windsor/Essex County ON Flooding/hail/tornadoes/wind 127,200 140,193 June 16–18, southern Alberta and Saskatchewan Flooding/waterJune 29, various regions, AB and Saskatoon, SK Hail/flooding/windstorm/

lightningJuly 1–3, Swift Current, Wynyard and Hudson Bay region SK Flooding/hail/tornadoes/windJuly 12–13, Calgary and southern Alberta Hail/wind 530,000 584,137 Aug. 22, Calgary AB Hail/windstorm/lightning/waterSept. 20–21, Newfoundland and Labrador Flooding/hurricane/wind

(Hurricane Igor)Sept. 30–Oct. 1, Ontario and Quebec Flooding/windstorm/lightning/

water (remnants of Tropical Storm Nicole)

Dec., Atlantic provinces StormsTotal 2010 1,235,299 1,361,480

2011March 5–7, Ontario and Quebec Flooding/ice/windApril 10–11, Thunder Bay, southern and eastern Ontario Hail/windstorm/lightning/waterApril 27–28, Ontario and Quebec Hail/tornadoes/windMay 14–17, Slave Lake AB Fire 742,000 794,602 June 2, Manitoba and Saskatchewan Hail/windstorm/lightning/water

22 IBC Facts 2017



June 7, southern Ontario Hail/windstorm/lightning/waterJune 17–21, Weyburn and Estavan, SK Flooding/waterJune 23–24, Ontario and Quebec Flooding/hail/windstorm/

lightningJuly 7, Red Deer, Bergen, Olds, Bowden and Innisfail, AB Windstorm/hail/lightning/waterJuly 18–19, Alberta, Manitoba and Saskatchewan Hail/tornados/windAug. 15, Saskatoon, Biggar and Warman, SK Hail/flooding/windstorm/

lightningAug. 21, Goderich ON Flooding/hail/tornados/windAug. 28–30, New Brunswick, Quebec and Ontario Flooding/wind

(remnants of Hurricane Irene)Nov. 27, Alberta Wind 238,500 255,408 Total 2011 2,044,397 2,189,329

2012March 2–3, Ontario and Quebec Windstorm/winter storm/waterMay 26–29, Thunder Bay ON and Montreal QC Flooding/wind 259,700 273,997 June 25–27, Saskatchewan Windstorm/hail/lightning/waterJuly 11–12, Edmonton AB Flooding/hail/windJuly 22–23, Hamilton, Ottawa and surrounding areas ON Flooding/hail/windJuly 26, southern Alberta (Cardston to Nanton) Hail/windAug. 11, southern Quebec Flooding/windstorm/lightning/

waterAug. 12, region around Calgary AB Flooding/hail/wind 562,000 592,940 Aug. 14, Calgary AB Hail/windstorm/lightning/waterOct. 29–31, Ontario and Quebec Flooding/wind

(remnants of Hurricane Sandy)Total 2012 1,460,893 1,541,320

2013April 11–14, southwestern Ontario Winter stormMay 28–June 2, parts of Ontario and Quebec Flooding/windJune 19–24, southern Alberta Flooding/hail/wind 1,827,000 1,910,316 July 2, Edmonton AB Hail/windstorm/lightning/waterJuly 8–9, Toronto and southern Ontario Flooding/wind 999,500 1,045,080 July 19, central and southern Ontario and southwest Quebec Flooding/hail/windJuly 19, Regina SK Hail/lightning/waterJuly 23, southern Alberta Hail/windstorm/lightning/waterDec. 22–26, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador

Freezing/ice/wind

Total 2013 3,540,388 3,701,839

2014June 17–18, southern Ontario Flooding/hail/tornadoes/windJune 28–July 1, southern Manitoba and Saskatchewan Flooding/wind 109,400 112,196 July 5, Quebec, New Brunswick, Nova Scotia and Prince Edward Island

Windstorm/flooding/water (remnants of Tropical Storm Arthur)

July 17, Alberta and Saskatchewan Hail/windstorm/lightning/water

IBC Facts 2017 23



Aug. 4–5, southern Ontario Flooding/windAug. 7–8, southern Alberta, Calgary Flooding/hail/wind 568,900 583,441 Nov. 24–25, Ontario and Quebec Flooding/windTotal 2014 1,013,436 1,039,339

2015June 11–12, Alberta, Saskatchewan and Manitoba Hail/windstorm/lightning/waterJune 22–23, Ontario Flooding/windstorm/lightning/

waterJuly 21–22, Alberta and Saskatchewan Flooding/hail/tornadoes/wind 349,410 354,378 Aug. 4–5, Alberta Flooding/hail/wind 131,000 132,863 Aug. 29, British Columbia Windstorm/waterTotal 2015 604,534 613,129

2016Feb. 24–25, New Brunswick, Ontario and Quebec Flooding/ice/snow/windMarch 23–26, Ontario Winter storm/windstorm/waterMay 3–19, Fort McMurray AB Fire 3,816,447 3,816,447 June 24–25, Saskatchewan, Manitoba and Ontario Flooding/windstorm/hail/waterJune 28–30, Alberta, Saskatchewan and Manitoba Hail/flooding/windstorm/waterJuly 8, Ontario Windstorm/water/lightningJuly 8–11, Alberta, Saskatchewan and Manitoba Flooding/hail/windstorm/waterJuly 15–16, Alberta and Saskatchewan Flooding/hail/windstorm/waterJuly 18–20, Alberta, Saskatchewan and Manitoba Hail/windstorm/lightning/waterJuly 22, Saskatchewan Hail/windstorm/lightning/waterJuly 27, Ontario and Quebec Hail/windstorm/lightning/waterJuly 30–Aug. 1, Alberta, Saskatchewan and Manitoba Hail/windstorm/flooding/water 473,172 473,172Sept. 28–30, Ontario Flooding/windstorm/waterOct. 9–11, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island

Windstorm/flooding/water (remnants of Hurricane Matthew)

Total 2016* 5,166,046 5,166,046 * preliminary

Sources: 1983 to 2007: IBC, PCS Canada, Swiss Re and DeloitteSources: 2008: IBC, CatIQ

Sources: 2009, 2011, 2012: CatIQ, PCS CanadaSources: 2010: IBC, CatIQ, PCS Canada

Sources: 2013 to 2015: CatIQ, PCS CanadaSources: 2016: CatIQ, PCS Canada

24 IBC Facts 2017

Market conduct – going global

The International Association of Insurance Supervisors’ “Insurance Core Principles” are driving regulatory activity in Canada. For instance, they are influencing the market conduct regulation governing how insurance companies treat their customers. The increased influence of international regulatory bodies means that regulation of the P&C insurance market in Canada is becoming more consistent with regulations that are in place around the globe.

IBC monitors global regulations to assess their impact on Canadian insurers. This involves ensuring that international regulations are sensitive to the domestic regulatory landscape and the particulars of the P&C insurance industry in Canada. IBC also participates in the discussions led by the Global Federation of Insurance Associations, providing input into the development of many aspects of international regulations that affect P&C insurers.

While it is impossible to pinpoint exactly how much the industry pays per year to comply with regulatory requirements, it’s estimated to be hundreds of millions of dollars.

Auto insurance, in particular, is very highly regulated. The provincial governments determine how claims are handled and how complaints are managed; they also administer rate approval systems. IBC is advocating for auto insurance reform in several provinces, including Alberta, Ontario, and Newfoundland and Labrador.

Through IBC, the P&C insurance industry also engages with regulators and the federal government to ensure that new regulatory initiatives balance the needs of both consumers and insurers.

Enhancing the efficiency and cost effectiveness of insurance regulation can also bring significant benefits to consumers by reducing costs, which will be reflected in premiums.

OSFI’s 2015 Minimum Capital Test (MCT) Guideline captured significant regulatory capital changes following an 18-month consultation period with the industry. Further revisions to the MCT will be announced in mid-2017, in the form of a Draft MCT that will be subject to a public consultation. The final MCT Guideline is expected in September 2017 and will come into effect on January 1, 2018.

In recent years, standards and guidelines developed by international bodies have had a greater influence on Canada’s regulatory system. This is a result of the global financial crisis of 2008, which spurred a revamping of rules worldwide.

Particularly significant is the guidance provided by the G20, a forum for the governments and central bank governors of 20 major economies; the Financial Stability Board, which monitors and makes recommendations about the global financial system; and the International Association of Insurance Supervisors, which is leading the development of the global

Insurance Capital Standard (ICS). While the ICS is currently in early stages of development, later versions of the ICS are likely to influence the Canadian capital standard, where deemed appropriate by OSFI. IBC is collaborating with its international colleagues to monitor and comment on the ICS development and with OSFI to ensure that any capital changes are appropriate in the Canadian context.

To better align with international trends and the evolving expectations of regulators, IBC has revised its Code of Rights and Responsibilities and its Standards of Sound Marketplace Practice. All IBC members are urged to adopt the new voluntary code and standards, and post them on their websites.

The federal and provincial governments regulate the P&C insurance industry. The provincial governments regulate market conduct, and the federal Office of the Superintendent of Financial Institutions (OSFI) regulates solvency.

Regulation and regulatory issues

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