AIG communications director Lynn Woodburn confirmed to Canadian Underwriter Wednesday evening that it would no longer underwrite new policies in personal lines. This confirmed speculation among brokers that came to light late last week. The decision does not affect AIG’s commercial business, which it will continue to write in Canada.
“The individual personal insurance line of business represents a small percentage of our portfolio in Canada and based on market conditions, we have decided not to underwrite new policies in this area,” Woodburn said. “This decision does not affect the rest of AIG Canada’s portfolio, including accident and health policies.
“We will ensure all in-force policies continue to receive comprehensive policy administration and claims services.”
Woodburn added that the insurer continually reviews its operations “to make sure that AIG Canada provides clients and partners with valuable products and services.” AIG is providing no further information on the announcement.
AIG Insurance Company of Canada reported a total of about $1.2 billion in direct premiums written (DPW) in 2018, based on figures from the Office of the Superintendent of Financial Institutions (OSFI).
In personal lines, the company reported just over $49 million DPW for personal property, and $6.3 million DPW for private passenger auto lines.
In commercial lines, AIG Canada wrote just under $569 million DPW in commercial property business and $87.3 million DPW in commercial auto.
What do brokers think about the announcement?
“When any insurance company leaves, or reduces their writing in specific lines of business in the Ontario market, it should be a concern,” Colin Simpson, the CEO of the Insurance Brokers Association of Ontario (IBAO) told Canadian Underwriter Thursday. “Unfortunately, AIG isn’t alone in their actions. We’re seeing many companies adjust their underwriting appetite within current market conditions.”
Amid stories of tightened profitability in both home and auto lines across the country, Simpson said “a broker’s role is becoming increasingly difficult, but that much more important. At the IBAO we’re committed to continue working with our members, their business partners and the provincial government to ensure there’s an appreciation of current market trends, and do whatever we can to make certain Ontarians continue to have access to a competitive and vibrant insurance market.”
Nationally, Insurance Brokers Association of Canada president Chris Floyd said “it is unfortunate that AIG has decided to leave the Canadian personal insurance marketplace, a move that will reduce choice for consumers. Loss of market is never easy. However, brokers have the opportunity to advise and assist their clients through this change.”
With headquarters in Toronto, and branches in Vancouver and Montreal, AIG Canada reported handling about 21,000 claims in 2018, paying out just a shade over $1 billion for direct claims incurred. Its total claims ratio in 2018 was 77.55%.
AIG Canada began operations in Canada in 1966, celebrating 50 years in Canada in 2016. It is part of American International Group, Inc., based in New York City, which is celebrating 100 years in business in 2019.