There Sonnet Insurance Companyproperty of Definity Financial Company, is withdrawing from the automobile insurance market in Alberta. The company says limited opportunities for profitable growth in the current auto insurance environment in this province were a key factor in making the decision.
Following a thorough review of its operations in the province, the direct insurer announces that it will phase out its auto insurance operations in Alberta. “Sonnet has submitted a notice of intent to withdraw from auto insurance to the Alberta Superintendent of Insurance, listing December 13, 2024 as the anticipated withdrawal date,” the company said in a June 13 news release.
The company adds that it will no longer issue new or renewal auto insurance policies in the province after this date. Existing customers will be informed in a timely manner.
The company’s home insurance operations in Alberta are not affected by the change. The company is not ceasing its activities in any other province and continues to carry out its automobile insurance activities in New Brunswick, Nova Scotia, Ontario, Prince Edward Island and Quebec. Home insurance is also available from the company in British Columbia.
“Sonnet will continue to focus its efforts on profitably developing its automobile insurance activities in other regions of Canada,” specifies Paul MacDonaldexecutive vice president of personal insurance and digital channels at Sonnet.
Concerns
In publishing its quarterly results, Definity’s senior management has repeatedly expressed its concerns regarding the Alberta automobile insurance market over the past year and a half.
During the most recent conference call held on May 10 following the publication of the results for the first quarter of 2024, the vice-president of finance Paul Mather said: “Our approach includes focusing on areas of the business where we see opportunities for profitable growth. In the current environment, this excludes Alberta, where we are maintaining our pause on all Sonnet marketing activities. »
In talking with financial analysts, the president and CEO Rowan Saunders also commented on Alberta’s recent decisions regarding pricing limits on auto insurers: “Alberta’s environment is obviously less attractive to us than that of other provinces. When we think about our portfolio in Alberta, it only represents 12% of our total automotive portfolio. We hold 5% at Sonnet and 7% through brokers. »
“The broker profession is in a different position from our direct insurer activity. Brokers are in a much more mature market,” he adds.
Discussions are continuing with the Alberta government to find a reasonable compromise. In the meantime, Mr. Saunders affirmed that Sonnet would maintain its activities in this market.
Sonnet’s premium volume reached approximately $66 million as of March 31, 2024, over a 12-month period, said Definity’s CEO. Repeating the cessation of marketing activities for this product in the province, he added: “We are maintaining risk management in this area, and all other new business has really been redirected to other divisions and more welcoming regions . We will continue to engage and observe how this unfolds. »
In its management report, Definity also stated: “The volume of direct premiums written from our direct distribution network has been negatively affected by our profitability measures, including those taken in response to ongoing pricing restrictions in the automotive sector. of Alberta. »
Kate McCaffery with the collaboration of Alain Castonguay.
