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Canadian consumers of property and casualty (P&C) insurance face increasingly difficult decisions on what coverage they need due to factors such as climate change, identity theft and recent court decisions that have increased the vulnerability of organizations and individuals to lawsuits.
The situation is made more complex by the competitive nature of the insurance sector in Canada. There is a wide variety of products, premiums and coverage options that must be matched to specific needs to ensure adequate coverage.
“Competition for business among insurers is intense,” says Ken Orr, past president of the Insurance Brokers Association of Canada (IBAC), which represents about 30,000 P&C insurance brokers.
“There is currently downward pressure on price, the product is constantly improving and international insurance companies see Canada as a profitable market in which to invest,” he says.
But increased competition for business is also tough for consumers who must base their coverage choice on more than just price.
“We believe brokers are just as important when the market is soft as when rates are rising and consumers are struggling to find premiums that remain within their budgets,” says Mr. Orr. “We work for consumers, not insurers, so it’s in our interest to find products that best suit the needs of our clients.”
He believes competition in the insurance industry is “here to stay,” which means products from insurers will continue to improve as will services provided by brokers.
P&C insurance includes home, car and business insurance, but not life insurance. With registered annual sales of over $30 billion and assets of over $80 billion, the P&C insurance sector includes more than 200 companies that underwrite or “manufacture” the product, and brokers who distribute approximately 80 per cent of the product. The industry provides about 100,000 jobs in Canada and generates $6 billion in annual taxes for all levels of government.
Stan Griffin, president and CEO of the Insurance Bureau of Canada (IBC) whose member companies provide about 90 per cent of the non-government general insurance sold in Canada, says while the industry is currently in a “pretty good position,” natural disasters such as floods, forest fires and winter storms brought on by climate change are making it increasingly difficult to accurately assess risk.
“We seem to be seeing an increasing number of smaller natural disasters such as the flooding in Alberta and Ontario in 2005 and the forest fires in B.C. a few years back, rather thaninfrequent massive catastrophes such as the ice storm in 1998,” says Mr. Griffin.
He points out that earlier this year Lloyd’s, the world’s leading specialist insurance market, advised the insurance industry to face up to the growing threat of climate change by understanding and actively managing risks from emerging threats such as greenhouse gases and rising sea levels.
“And that’s just one area of the emerging issues acing the insurance industry,” says Mr. Griffin. “Here in Canada, we also face increased uncertainty over certain types of claims as a result of recent court decisions.”
A study conducted earlier this year on behalf of IBC by researchers at the University of Western Ontario found that the legal environment in Canada is becoming increasingly uncertain, and that organizations and individuals are more vulnerable to lawsuits than ever before.
“The study revealed precedents that have significant implications for insurers,” says Mr. Griffin. “For example, a case of accidental shooting during a hunting trip resulted in a redefinition of the concept of a ‘motor vehicle accident.’
“A hunter stepped out of his truck and shot what e thought was a deer. But it was another hunter who was hit in the leg. The wounded man sued and the insurer of the defendant’s truck was included in the suit. On appeal, it was found that the incident qualified as a motor vehicle accident because the hunter would not have been in a position to shoot the plaintiff had he not used his truck.”
Mr. Griffin says this case and others cited in the report illustrate the increasingly complex legal environment in which insurers are operating in Canada.
“Decisions like these not only raise the cost of claims, but also make it very difficult for insurers to price their products because they don’t know what claims they might have to pay,” he says.
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Associations and Partners also appearing in this report:
Statistics show that people are three times more likely to become disabled during their working life compared to dying prematurely, says Irene Klatt of the Canadian Life and Health Insurance Association
...things are starting to come with very big bills,” says David Blevins, a consultant with 30 years experience in the employee benefits area, and head of Blevins Insurance Group of Barrie, Ontario.
Green Shield Canada, which administers health-care and social benefits programs for 1.2 million Canadians.
Value in good advice By Jack Garramone, Vice-President,Clarica Sales Force, Sun Life Financial
Diamond Retirement Planning in Winnipeg, Man.,
Bruce Ball, a tax partner and CA with BDO Dunwoody LLP in Toronto.
Today’s auto insurance market By Gregory Ellis Co-founder, kanetix.ca
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