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How Challenging is the Canadian Insurance Market?

|Jul 26|magazine10 min read

The July edition of The Business Review Canada is now live!

By: Adam Groff

Different insurance markets across the globe come with their own unique challenges and such is the case with Canada’s insurance market.

Taking into consideration the various factors that are involved with insurance providers in The Great White North and the types of coverage they offer, the stability of the market is in constant fluctuation.

What are some specific challenges the Canadian insurance market faces and what types of insurers are leaders in the field?

In Transition

As with any type of transition, the Canadian insurance market is experiencing certain areas of significant change. With change comes challenges, specifically challenges that arise from slow market growth, a softening economy, and certain regulatory adjustments.

To overcome these challenges and successfully follow along with the transition, Canadian insurance companies must optimize  operating costs, adapt to ever-changing consumer needs, and find new ways to standout among the insurance marketplace.

Risk Factors

For an insurance company, there is a certain amount of risk involved that is an inherent part of the insurance game. Although Canada’s insurance market is similar to that of other countries, namely the U.S., there are risk trends unique to Canada.

  • Agricultural Insurance – Certain disease risks for livestock associations across Canada are becoming more prevalent.
  • Financial Institution Insurance – Due to poor investment income opportunities, rate increases are taking their toll on the financial sector.
  • Catastrophe Risks – Because of Superstorm Sandy, marine underwriters are forced to take a deeper look at the risks involved with claims and deductibles associated with cargo, hull, and flood damages specific to higher risk regions in Canada.
  • Cyber-Risk Insurance – Many Canadian companies dealing in online transactions are shifting insurance from business interruption coverage to insurance coverage specific to online credit card transactions and customer data protection, giving insurance underwriters a specific challenge.

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Leaders in the Market

In terms of major forms of coverage, there are some types of insurance that are leading the Canadian market. With renewal rates and risk management in mind, here are some of the front runners:

  • Property and Casualty – As usual, property and casualty insurance are top priority for insurers all across Canada. General liability, automobile, and both catastrophe and non-catastrophe insurance have some of the highest renewal rates with little to no rate change.
  • Employee Health Benefits – Premium adjustments and coverage for employee healthcare saw favorable renewal rates in the areas of basic life, health, and dental benefits.
  • Small Business – Because of an increase in reported losses due to slip and fall coverage, small and midsize business renewals for property and general liability insurance are in fair standing.
  • Construction – With the recent upswing in infrastructure growth of both commercial and residential construction in Canada, general liability, excess casualty, builders’ risk, and owners indemnity insurance are keeping steady in terms of renewal.

When it comes to insurance challenges, the Canadian market does have its fair share, but it still seems to thrive.

About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including personal health, no exam life insurance, and business.