“Perfect storm”: How Canada’s P&C insurance industry feels about 2023
Canada’s property and casualty insurance industry may not be facing its “toughest” year ever in 2023, but more than 89% of industry professionals agree the multitude of issues facing the industry at once is creating a “perfect storm.”
“Every year has its challenges,” as one anonymous industry professional commented in a recent Canadian Underwriter survey. “We’ve been in a hard market now for three years. I do believe that the hard market will continue, losses from extreme weather events are increasing, the talent pool is shrinking, all sectors are short-staffed, leading to more issues, and the supply chain is causing delays.
“For all these reasons, 2022 was challenging. I don’t believe any of these issues will be fixed for 2023, but I do believe we will have to deal with all the above issues continuously for many more years to come, with the possible exception of the hard market. It’s easy for us to say it will be the most challenging year ever, because it’s what’s facing us today. What we face today is daunting, but we’ve gotten through it with 100% success so far.”
Canadian Underwriter conducted an online survey Wednesday of more than 330 P&C industry professionals. Survey respondents included self-identified brokers (38%), insurers (29%), claims professionals (12%) and risk managers (4%).
Reponses were mixed about whether this is the “toughest” year the industry will face. Survey respondents were asked how strongly they agreed or disagreed with the statement: “The Canadian P&C insurance industry is facing its most challenging year ever in 2023.”
Only 13% strongly agreed with the statement. Another 40% agreed, whereas 30% were neutral (neither agreed nor disagreed) and 15% disagreed.
Respondents listed the 9/11 attacks, the COVID-19 pandemic, and the politicization of Alberta auto insurance as single events that may have represented “tougher” years for the P&C industry.
But near total unanimity prevailed when industry professionals were asked to respond to the statement: “The challenge facing the P&C industry is not so much one single issue, but the fact that it’s facing so many issues at once.”
About 39% agreed strongly while another 50% agreed with the statement. Only 2% disagreed.
“There are so many issues facing the brokerages that it is tough to decide where to focus limited energy and resources,” as one industry professional observed.
Talent acquisition and retention is the top issue facing the industry today, as indicated by 44% of respondents who were asked to select from a list of 13 different issues provided.
Natural catastrophes and climate change ranked second at 34%.
Rounding out the Top 5 concerns on the list were: P&C insurance market cycle/hard market (17%), economic recession (15%) and effect of rising interest rates on claims costs (13%).
The talent issue magnified the complexity of all the other issues, many said, since inexperienced industry professionals were being tasked to navigate the industry through highly volatile and uncertain times. As one respondent put it: “Perfect storm. Climate issues [are] increasing [claims] severity. Supply chain issues and inflation affecting claims adjusting. [There is a] gap in experience with a lot of people retiring, and [the] staff left is young and inexperienced.”
The situation, many noted, is dire in both brokerages and insurance companies alike.
“Having been 50 years in the business,” said one industry professional, “I have seen most if not all the…issues listed [in the survey]. But the lack of qualified talent in the industry is shocking and needs immediate attention.”
Said another: I think it’s the staff shortage at the insurance company level as well as the brokerage level is unprecedented. All other challenges are not new or, if they are, they could be dealt with if companies were sufficiently staffed with competent individuals.”
Feature image courtesy of iStock.com/benitolamalfa
