Why 2024 adds up well for P&C insurers

Yes, 2024 was rough, but Canada’s property and casualty (P&C) insurance industry navigated a flood of significant natural catastrophe loss events.

Their reward? Signs of recovery during 2024 Q4, particularly in the automobile sector, and an opportunity to feel optimistic at the start of 2025, says a Global Market Intelligence report from S&P released Mar. 27.

S&P’s analysis of 2024’s final quarter “highlighted significant improvements in both the auto and property segments, signaling a potential turning point for the industry,” says Tim Zawacki, insurance sector strategist at S&P Global Market Intelligence. “While potential hurdles such as tariffs and regulatory pressures persist, insurers’ resilience in navigating these complexities bodes well for future growth.

“The automobile sector stands at the forefront of this recovery, posting strong premium growth and improving loss ratios on a year-over-year and sequential basis. The Canadian P&C insurance market is poised for an outstanding year ahead, due in part to the potential for favorable comparisons in underwriting profitability during the third quarter.”

Related: 2024 catastrophic insured losses smash records

Market segment results

For specific lines, the report’s data sees mixed growth and losses. Insurance revenue for auto lines grew to $28.35 billion, up from $23.17 billion in 2023 for a 22.3% full-year growth rate. “This growth was driven by increasing rates and a stabilization of claims frequency, as carriers adjusted their pricing strategies in response to loss-cost inflation and regulatory changes,” the report notes.

S&P adds the gross insurance service ratio (the sum of an insurer’s net premiums written ratio, net liability ratio, and ceded reinsurance ratio) deteriorated to 94.8% in 2024, compared to 92.6% in 2023.

A strong fourth-quarter performance last year drove much of auto’s positive 2024 showing.

“During the quarter, the industry recorded insurance revenue of $7.31 billion, a 21.9% increase from $6.0 billion in the same period of the prior year,” S&P’s report says. “The gross insurance service ratio worsened by 5.4 points on a year-over-year basis but improved by 2.6 points on a sequential basis at 95.3%.”

Private passenger auto insurance revenue soared 25.9% annually to $5.81 billion, but commercial auto growth was slower – 7.3% to $1.36 billion. The bulk of the growth was due to rate increases, notes S&P.

Meanwhile revenue for property insurance lines posted a 17.8% surge to $24.31 billion in 2024, while the gross insurance service ratio dipped 6.4 percentage points to 90.5%.

Related: How Intact is changing its home insurance product

Property lines results posted a steady improvement during 2024’s final quarter. “In the third quarter of 2024, catastrophe losses surpassed expectations, primarily driven by the Jasper wildfires, resulting in a gross insurance service ratio of 128.1%,” the report notes. But fourth-quarter performance brought “the full-year gross insurance service ratio back under control.”

Twin storms to weather

Two uncontrollable factors may impede the P&C industry’s 2025 success – NatCat events, which are increasing in frequency and severity, and the U.S.-Canada trade war.

“We expect geopolitical tensions related to tariffs could significantly affect certain aspects of the insurance landscape, both directly and indirectly. Higher costs to repair and replace damaged vehicles and prospects for declines in the transport of goods across the U.S. border could impact the industry’s profitability and growth,” says Zawacki.

Related: How tariffs could raise home and auto rates

Feature image by iStock/tomhoryn