Property and casualty insurance in Canada is often referred to as general insurance. This treatment uses those terms interchangeably.

The Canadian general insurance industry consists of over 230 private companies, with annual premiums of more than $18 billion. The premiums are well dispersed, with no company having a market share of greater than 8 percent. The general insurance industry in Canada employs over 100,000 people. Of that 100,000 employees, about 60 percent work for stand-alone intermediaries and 40 percent for companies.

In addition, the governments of Manitoba and Saskatchewan operate monopolies selling auto insurance. In Quebec the government provides the bodily injury portion of auto insurance and in British Columbia, the Insurance Corporation of British Columbia has a government sanctioned monopoly on auto coverage. Automobile insurance accounts for more written premium in Canada than all other lines combined.

Almost 68 percent of the written premiums are with foreign owned insurers.

The only other mandatory line of insurance in Canada is workers compensation.

Insurance in Canada is subject to regulation at the Federal level and at the Provincial level. The Federal government–through the Office of the Superintendent of Financial Institutions–oversees the solvency of those insurers doing business in more than one province. (These companies account for over 80 percent of all insurance written in Canada.) The provincial superintendents regulate those companies that do business only in one province.

The provincial superintendents also administer the Insurance Acts of their province. These acts provide the superintendents with broad control over the insurance industry in a particular province. Provincial superintendents regulate the licensing of agents, brokers, and independent adjusters.

Most insurance in Canada is sold by brokers. The brokers are licensed at the provincial level. Commissions paid to brokers range from 12.5 percent to 20 percent.

As in the U.S., Canadians may purchase the following types of insurance: property; boiler and machinery; general liability; automobile; workers compensation; marine; and crime.

The typical property policy is written on an open perils basis. Required coinsurance varies by risk and company, while both specific and blanket coverage is available. Canadian brokers may sell replacement cost and business interruption. Finally, premium discounts are available for insureds who install certain types of alarms.

Boiler and machinery policies come with either standard U.S. or U.K. wordings. When an insurer writes a boiler risk, it must also conduct an inspection of that risk.

The general liability form may be either occurrence or claims-made. Manuscripted coverage is also available. General liability insurance is widely available. However, that was not always the case. In the mid 1980s the international insurance community was avoiding the Canadian market. Recall that this was the time of record-breaking court settlements in the United States. Insurers, not understanding that Canada was quite different from the U.S., pulled back for a while. The biggest difference is that Canadian courts rarely award punitive damages.

As mentioned above, auto insurance is by far the largest line written in Canada. $9.3 billion per year is written by private insurers with another $4.3 billion being provided by various governmental insurers. Each province regulates auto insurance, with minimum limits ranging from $50,000 CSL to $200,000 CSL. Unlike in the U.S., Canadian auto insurance forms typically include defense costs within the limit of liability.

Workers compensation is a federal government monopoly. All workers are covered by this plan other than agricultural and domestic workers. Employers may also purchase employers liability insurance. The workers compensation policy also covers medical expenses and occupational diseases.

Marine and crime insurance are also available.

The years 1995 through 1998 produced the four costliest storms in Canadian history. Of these, the 1998 ice storm in Ontario and Quebec required the largest pay-out by insurers. Nearly 700,000 claims were filed, making it the second largest single-event total in North America, behind only the 710,000 claims of Hurricane Andrew. That year, losses from ice storms were more than $1.4 billion, accounting for more than 6 percent of total P&C insurance losses. In most years total catastrophic losses make up about 1 per cent of total losses.

Since 1998, Canadian P&C insurers have been allowed to set aside earthquake premiums as unearned and untaxed reserves. The fear among insurers and legislators was that a major earthquake in a heavily populated area of Canada could wipe out Canadian insurers.

As with American insurers, Canadian companies have, for a long time, operated with a combined ratio of over 100 percent. Although that figure declined from 111 percent in 1993 to 104 percent in 1997, the Canadian industry is still dependent on investment income to make a profit.

While combined ratio is one way of looking at an insurer's profitability, an examination of return on equity (ROE) allows insurance to be compared with other types of financial institutions. From 1991 to 1997, Canadian insurers had an ROE of 10 percent. The only other type of financial institution to do better during that period was securities dealers, with an ROE of 20 percent. Those financial institutions with ROE's not as good as P&C insurers include: banks and trusts; credit unions; and life and health insurers.

While many U.S. state insurance laws regulate the type of securities in which an insurer may invest, federally chartered Canadian insurers are subject to what is known as the “prudent portfolio” approach. This approach requires insurers to establish and adhere to lending and investment policies that a “reasonable and prudent person” would apply.

The standard ISO personal auto policy provides coverage for Americans traveling to Canada. Before going to Canada, Americans must obtain a Canadian Non-Resident Inter-Province Motor Vehicle Liability Insurance Card from their insurer. Most agents have these in their offices. This card verifies that the American driver carries liability limits at least as high as those required in the province(s) to be visited. For information on the various provincial requirements see Table of Limits. Print subscribers may find this table on the D.2 pages of the Personal Auto tab.

Canadian citizens must purchase auto insurance in the province where they reside. As with American policies, Canadian policies do not provide coverage in Mexico. But Canadian policies do cover in the U.S. Residents of Quebec receive worldwide bodily injury liability coverage through the Société de l'assurance automobile du Québec (SAAQ).

Canadian homeowners policies are very similar to those sold in the U.S. Canadians may choose from named or open perils to cover their property. As in the U.S., Canadian policies exclude earthquake and flood. The liability portion of the policy covers on a worldwide basis, just like the U.S. policy.

The top ten writers of insurance in Canada in 1997 were (source: http://www.fin.gc.ca):