Québec City – The Autorité des marchés financiers (the “AMF”) has released its 2018 Annual Report on Financial Institutions, which discusses, among other things, the economic, technological and environmental issues faced by financial institutions carrying on business in Québec. These issues can present financial institutions with challenges and risks but also opportunities. The report includes statistics on financial services cooperatives, trust companies, savings companies, insurers of persons (life and health) and damage insurers (P&C), including automobile insurers.

The digital transformation within financial institutions continues

Changes in consumer behaviour and access to new technologies are speeding up the digital transformation and giving rise to new practices, opportunities and operational, strategic, ethical and financial risks for financial institutions. Furthermore, the use of new technologies is increasing the attack surface and vulnerabilities that cyber criminals can exploit. Information technology and communications risks figure prominently among the AMF’s concerns. The findings of its supervisory work are being used to implement an appropriate framework conducive to the orderly development of the industry and consumer protection.

Household debt

In recent years, low interest rates and rising residential property values have made it easier for Canadian households to access financing. Although the debt ratio for Québec households is lower than in some other Canadian provinces, high household debt continues to be of concern to the AMF. The key interest rate increases during 2018 had repercussions for many Québec consumers.

Natural disasters

With over $2 billion in damages, 2018 was the fourth most expensive year ever for Canadian insurers in terms of natural disasters. Based on the trend observed in recent years, insurers will be faced with these types of disasters on an ever more frequent basis. For example, heavy preciptation during the winter and rapid melting of the snow cover resulted in a higher number of claims in 2018.

Finance and insurance industry statistics

  • The finance and Iisurance sectorAs defined by the Institut de la statistique du Québec, this category covers deposit institutions (including banks), insurance and securities. plays a significant role in Québec’s economy, accounting for more than 6% of Québec’s gross domestic product (GDP).
  • Growth of the Québec finance and insurance sector’s GDP was 2% in 2018, slightly higher than its Canadian counterpart, which was 1.9%.
  • In 2018, the industry employed close to 149,000 people, slightly more than 4% of Québec’s labour force.
  • The relative weight of the Québec finance and insurance sector in Canada has been stable for several years now, at 17%.

Financial institution statistics

  • The assets of the Desjardins caisse network continued to trend upward, growing from $168.7 billion in 2017 to $177.7 billion in 2018, for an increase of 5.3%.
  • The number of AMF-licensed trust companies and savings companies increased from 42 in 2017 to 43 in 2018, while the number of financial services cooperatives declined from 283 in 2017 to 262 in 2018.
  • As at December 31, 2018, trust companies and savings companies held $353.6 billion in assets, up slightly more than $4.6 billion from 2017.
  • The 89 insurers of persons (life and health) licensed to carry on business in Québec wrote $17.9 billion in direct written premiums. Québec’s 17 chartered insurers posted their strongest growth in 2018, with a 7.5% increase in direct written premiums.
  • The 165 damage insurers (P&C) licensed to carry on business in Québec wrote $10.5 billion in direct written premiums. In 2018, direct written premiums were up 6.7%, the strongest increase in 10 years.
  • The average written premium for private passenger vehicles rose from $564 in 2017 to $595 in 2018, for an increase of 5.5%.

The Autorité des marchés financiers is the regulatory and oversight body for Québec’s financial sector.

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