It's funny...your talking points are EXACTLY...like word for word... what my SIL says (she works in the industry). The. Exact. Same.
The insurance companies certainly have a well oiled disinformation program.
1. Profits don't mean profits from automotive activity. Just profits.
2. There were 8.7 million cars registered in Ontario in 2017, at an average of $1,450 (according to the IBC data on average insurance rates per province). That's 12.6 Billion. And the total profit for insurance companies, including investment activity, housing, etc, was 1.5. That's a small margin.
I expect (and also admire) your cynicism, but sometimes it leads you to be wrong.
The profits I mentioned were specifically for auto insurance divisions. $1.5 billion. Which was an increase of nearly 60% since 2012. The insurance industry as a whole (all arms of insurance) profits is many times that (obviously). You can also go back in time (not sure how long you've been an Ontarian?) and see that PRIOR to the introduction of No Fault Insurance in early 1990s, profits actually WERE pretty meager. But after No Fault, auto insurance companies profits skyrocketed.
As far as regulations, the The Financial Services Commission of Ontario (FSCO) regulates that the Return on Equity (ROE) for automobile insurance should be ~5%. For 2016, the average was nearly ~15%. Which ties almost perfectly in with the numbers you and I provide. ~15% of $12.6 billion is $1.9 billion. So clearly some companies are losing money (about ~$400 million cumulative between the 2 provided figures)...but as a whole profits were $1.5 billion.
FWIW, You can read the financials for companies and see their auto insurance and how they do and their average loss ratio per policy underwritten for each insurance division. And the companies that were loss/minimal profits, it wasn't because of lack of profitability from the premiums themselves. The loss ratio on these policies from some of these companies I looked at was around %70 (again, you can see this in their annual financial reports). So a 30% buffer for profit. But their operating expenses for their auto division alone were ~28%. Which when added with the loss ratio gets you that 2% figure you mention previously. (I actually saw one financial that was 99.5% when added!) The profitable companies auto division expenses were (obviously) much lower. So their losses weren't due to the auto insurance industry being unprofitable on its own, but rather their bloated operating expenses related to auto insurance. You can also see the re-investment returns of these profits is around 5-7% for most financials I've seen.
If it's one thing insurance companies are good at, it's assessing risk..and making profits. They offer products that make them money while exposing themselves to the least amount of risk. It defies belief that a company that is expert in these areas would keep offering a product that loses them money year after year after year. And you used the word "stagnant". An industry could make $1 billion a year for 20 years..and technically the profits would be "stagnant". Stagnant and losing money are different things.
And these industry talking points are PR 101. An industry viewed as negative or distasteful (politics, insurance, etc) will get their PR arms going in full swing. They'll have talking points (in this case less than 2% profit, no money to be made, stagnant, etc). They'll literally have everyone in the industry top down repeat those as often as possible, along with professional lobbyist, and the hope is those things get repeated enough and are believed by Joe Public and become "fact".
I expect (but don't admire) that someone who has worked or works in that industry would parrot those company talking points.
And I don't expect we'll ever agree on this industry being profitable. Which is fine.
