Trends in P&C industry’s claims rejections and payment times

Policy exclusions and other factors resulting in no coverage led to high claims rejection ratios by property and casualty (P&C) insurers in 2024, says a recent report by the Canadian Council of Insurance Regulators (CCIR).

“High claims rejection ratios may potentially point to issues such as lack of product clarity, insufficient disclosures by insurers or customers, or misalignment between product design and customer needs,” the report says.  

In all, 104,301 P&C claims in 2024 were rejected because of exclusions, 84,339 were denied because the claims weren’t covered, 3,138 off-coverage positions were taken due to clients not providing enough information, and 73,448 were rejected for ‘other’ reasons, CCIR’s data says. CCIR notes reasons for claims rejections within the ‘other’ category include duplicate claims, missing or incomplete documentation, and no coverage in the policy. This means there can be some overlap between ‘other’ and the ‘exclusions’ and ‘no coverage’ reasons for rejection.

Related: Insurers more reluctant to settle claims quickly 

Further, the regulators’ data shows insureds abandoned 33,697 claims during 2024.

Over the past three years, CCIR says average rejection ratios remained relatively stable across all P&C insurance classes.

“Overall, property insurance had the highest denial rate, followed by [accident and sickness] A&S,” according to the report. “Specifically, in 2024, small property insurers improved their ratios by 8.6 percentage points compared to 2023, while large A&S insurers showed an increase in denial ratio by 2 percentage points from 2023.”

Claim timeframe

A more significant change is seen in data on average days until a final payment is made to an insured claimant.

In the P&C sector, CCIR’s report finds the average days until final payment for property claims rose by 36 days (to 193) between 2023 and 2024. For A&S, the metric rose by 27 days (to 172).

Of particular note, the report says, medium-sized property insurers took an average of 135 additional days (to 304) to process payments in 2024 compared to 2023, an increase of nearly 80%. And large insurer A&S insurers needed an extra 95 days (to 172) – a 123% hike.

CCIR’s report doesn’t mention the significant impact of natural catastrophes during 2024, but longer payment times do occur because of the surge in demand for building supplies and labour during a rebuild after a catastrophe. Last year, Canada experienced a record number of NatCat claims.

One bright spot was an average five-day decrease for final payment of automobile claims (down to 144 days).  

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Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.