The insurer has put $290 million aside in after tax reserves to help to support its unit following the sudden storm events.
Toronto Dominion Bank (TD) has announced that it has decided to put aside $292 million in after tax reserves in order to help to support its struggling business and homeowners insurance business.
This underscores the trouble that the unit has seen following a growing number issues regarding litigation and claims.
The announcement for supporting its business and homeowners insurance arm comes at a time during which the government of the province of Ontario (in which its headquarters is located) has been making efforts to reduce the cost of coverage for consumers.
Homeowners insurance claims aren’t the only factor that have been causing challenges.
According to the bank, this provision – which is the second one in under a year – was greatly related to the costs not only of homeowners insurance but also on claims for bodily injury in vehicle accidents in Ontario. Last year in the final quarter, as well as in this year’s second quarter the insurer cautioned its shareholders that there has been an increase in both the severity and the frequency of claims from prior years.
Vehicle insurance has proven to be a challenge beyond home insurance and business policies over the last while in Canada. This is especially true in TD’s home province of Ontario, where the provincial government has been seeking to reduce the average rates for vehicle coverage by 15 percent.
It should be noted that TD isn’t the only homeowners insurance company to provision against losses. In fact, insurers in other sectors such as auto and business have also been making similar moves. Intact Financial Corp. – the largest property and casualty insurer in Canada has increased its reserves due to the uncertainty in Ontario’s auto coverage market. It boosted its reserves in the fourth quarter of 2012 by about $40 million.
TD homeowners insurance faced a massive cost when there was sudden and widespread flooding throughout Toronto and surrounding areas in July from flash storms, but the bank also released a statement that pointed out that “TD Insurance experienced an increase in third-party bodily injury claims in 2012 related to pre-2010 automobile reform.”