An Examination of Property & Casualty Insurer Solvency in Canada
Date
2009
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Western Risk & Insurance Association (WRIA)
Abstract
This paper provides both a qualitative and empirical analysis of insolvency experience in the Canadian property and casualty insurance industry. First, we provide a qualitative analysis of the differences between Canada and the U.S. that may help to explain the lower incidence of insolvency experience in Canada. These include differences in regulation and monitoring, such as the presence of a federal regulator and higher capital requirements, and differences in the environment, such as lower legal liability risk and less exposure to catastrophic risk. Second, we use logistic regression methodology and variables commonly used in U.S. studies of insurer insolvency prediction to test whether such models are able to predict insolvency for Canadian insurers. We include variables that attempt to capture some of the important differences between the Canadian and U.S. markets. The results suggest that only the profitability measure, return on assets, is found to be a statistically significant predictor of insolvency, and that result holds only one year prior to insolvency. This relationship is consistent with many previous studies on U.S. property and casualty insurer insolvency.
Description
Received approval from publisher re repository upload.
Keywords
property and casualty insurance, regulation
Citation
Anne E Kleffner, Ryan B Lee. "An Examination of Property & Casualty Insurer Solvency in Canada", Journal of Insurance Issues, Spring 2009, Vol. 32, Iss. 1; p. 52.