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Investor Presentaiton

INSURANCE INDUSTRY: ARGUMENTS & TACTICS Insurers Will Leave- The insurance lobby has argued that auto insurers will leave Alberta if claims costs are not controlled through an expansion of the minor injury cap. In reality, the auto insurance industry in Alberta appears to be healthy and competitive. Given the profitability of the auto insurance industry after 2004, there was an increase in the number of auto insurers entering the Alberta market. It would further appear that insurance companies in Alberta are currently profitable. According to AMA Insurance's QI - 2019 financial report, the company brought in a net income of $8,063,000* for the first quarter of 2019 in follow up to a full year net income of $15,592,000 in 2018**. Currently, there are approximately 70 auto insurance companies in Alberta, which speaks to the ongoing competitiveness of the market. This competitiveness is likely a significant reason why so few insurers choose to increase their premiums – i.e., they want to maintain market share. In fact, of the companies that applied to the AIRB for premium increases in 2018, only about 20% accepted the maximum 5% increase***. Contrary to conventional wisdom, this demonstrates that insurance companies are keeping premiums low in an effort to remain competitive and maintain market share. It also demonstrates that insurance companies are not likely to leave the province in droves, as the insurance industry suggests. Regardless, it is natural for businesses in the insurance sector to undergo a natural cull in accordance with cyclical periods of financial highs and lows, especially when increased competition keeps premiums low in an effort to maintain or increase market share. Sources: *AMA 2019 QI Financial Report **AMA - 2018 Financial Report ***2018 AIRB Report 38
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