Stock market losses will force premium rise
Canada’s largest property and casualty insurer, Toronto-based ING Canada has warned that insurance premiums will rise as the credit crunch and stock market falls squeeze insurers’ capital base.
The company announced third quarter results yesterday showing improved underwriting and marginally higher premiums but said improved operating performance had been wiped out by losses of $62m on “investment associated with the turbulent financial market conditions”.
Chief executive Charles Brindamour said: “When the investment potential drops, this puts pressure on prices, that, plus costs increases of providing the product, will put upward pressure on premiums." About half of ING’s investment were in equities. "We're exposed to general market movements," Brindamour said. "When your investment income is depressed, that translates into price pressure."
The insurer, which is 70% owned by Dutch banking giant ING Groep, said the stock market collapse has collided with rising costs in car insurance claims to rates up. A rainy summer in central Canada had increase property claims too, it said.
