IDEAS home Printed from
   My bibliography  Save this article

The Impact of the 2003 Regulatory Reform in the Canadian Property-Casualty Insurance Industry on Insurers' Surplus Levels


  • Peter Carayannopolos
  • Mary Kelly
  • Si Li


Canada modified the capital adequacy test for property/casualty insurers to align regulatory surplus and firm risk. We explore the impact of this change on insurer surplus holdings. We find firms have not changed the level of surplus in response to risk characteristics in the capital adequacy test. However, firms have reduced surplus holdings in jurisdictions in which automobile insurance reform has been successful, and increased surplus holdings in jurisdictions with escalating automobile insurance claims. Overall, larger firms have increased their surplus holdings since 2003, whereas smaller insurers report surplus-to-net-premium-written ratios that have been declining over time. In addition, insurers that are part of a larger financial conglomerate have consistently held more surplus than their counterparts. We conjecture that these higher levels may be related more to the conglomerate’s future strategic opportunities than the insurer’s level of risk.

Suggested Citation

  • Peter Carayannopolos & Mary Kelly & Si Li, 2010. "The Impact of the 2003 Regulatory Reform in the Canadian Property-Casualty Insurance Industry on Insurers' Surplus Levels," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 33(1), pages 54-84.
  • Handle: RePEc:wri:journl:v:33:y:2010:i:1:p:54-84

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:33:y:2010:i:1:p:54-84. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.