Canadian insurance market resilient amid challenges – report
Canadian insurance market resilient amid challenges – report | Insurance Business Canada
Insurance News
Canadian insurance market resilient amid challenges – report
It has secured a “healthy” combined ratio
Insurance News
By
Mika Pangilinan
A new report from Aon has found that the Canadian insurance market has remained resilient despite economic volatility, catastrophic climate events, supply chain and labour challenges and geopolitical uncertainty.
The report, published by the global professional services firm to aid its Canadian clients in making informed decisions about risk management and insurance programs, underscored the industry’s focus on profitable growth while adapting to evolving market conditions.
Despite facing headwinds, the Canadian property & casualty market concluded 2022 with what Aon described as a “healthy” combined ratio of 85.44%. This has positioned the market to concentrate on strategic growth in 2023, according to Aon, with primary insurers demonstrating flexibility in negotiations and maintaining their growth targets.
The market has also undergone significant transformations as portfolio remediations resulted in increased competition and a more diversified appetite. Still, Aon noted that insurers have remained cautious due to economic uncertainty, expensive reinsurance capacity, and the accelerated frequency and severity of climate events. This led to the observation that insurers are making strategic decisions about the capacity deployed to manage these risks effectively.
“The focus on risk quality will be top of mind for insurers and highlights the importance of risk mitigation for policyholders,” said Russell Quilley, Aon’s head of commercial risk solutions and chief broking officer for Canada. “Insurers require more information and stronger risk management practices than ever before as they navigate increasing volatility.”
Highlights from Aon’s market update
According to the report, the Canadian market experienced two of the top 10 global catastrophic events in 2022, namely the May derecho in Ontario and Quebec, and Hurricane Fiona. These events contributed to the third worst year for insured losses in Canadian history, estimated at $3.1 billion. In response, insurers are actively managing their natural catastrophe exposures by reducing capacity and implementing sub-limits for weather events, the report said.
Further insights from Aon’s market update indicate that valuations have become a focal point during the renewal process, highlighting the increasing emphasis on accurate assessments. Additionally, business disruption has become a major concern for companies, as a multitude of interconnected challenges and complex disruptions have led to a significant increase in the cost of business interruption claims.
Environmental, social, and governance (ESG) strategy and performance have additionally evolved from being ancillary documentation to a baseline requirement for comprehensive submissions, according to Aon.
The report also found that improved risk mitigation practices and cybersecurity controls have led to more favourable cyber market conditions.
The 2023 Canadian Spring Insurance Market Update can be read in full on Aon’s website.
What are your thoughts on this story? Feel free to comment below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
