The outlook for the Canadian P&C industry is stable for 2017 despite persistently low investment yields and catastrophe losses, Moody's said in a Dec. 12 report.
The stable outlook is driven by good demand, underwriting discipline and solid balance sheets, the rating agency said. Demand for insurance over the next 12 to 18 months should rise supported by Canada's economic growth, with the country's GDP growth rate expected to be at 1.0% for 2016, Moody's said.
Canada's P&C insurance industry continues to become more concentrated, with the top 15 insurance carriers holding a combined 82% share of the market. Industry consolidation should help industry leaders gain greater pricing power and stronger underwriting and claims management, the rating agency added.
Moody's said the reduced political pressure for further rate reductions in auto insurance premiums in Ontario, Canada's largest auto insurance market, should lead to stable underwriting earnings in both personal auto and property segments, absent significant catastrophes. The agency projects rate improvement in primary property insurance and reinsurance in the aftermath of recent catastrophes, including the Fort McMurray wildfires in Alberta.
Low interest rates continue to pressure investment yields for insurers, but they also have led to underwriting discipline, Moody's said.