AON, a leading global professional services firm, has released its Spring 2023 Canadian Insurance Market Update. Published in support of Aon’s ongoing commitment to help Canadian clients make better decisions about risk management and insurance programs, the report finds that despite economic volatility, catastrophic climate events, supply chain and labour challenges and geopolitical uncertainty, the market has proved remarkable resiliency. Primary insurers are maintaining strategic growth targets and more flexibility on negotiations than in recent years.
The portfolio remediations made during recent years resulted in a more stabilized market with increased competition and a more diversified appetite. However, economic uncertainty, costly reinsurance capacity, and accelerated frequency and severity of climate events has nevertheless required insurers to remain strategic about the capacity being deployed.
The focus on risk quality will be top of mind for insurers and highlights the importance of risk mitigation for policy holders,” said Russell Quilley, head of Commercial Risk Solutions and chief broking officer for Canada at Aon. “Insurers require more information and stronger risk management practices than ever before as they navigate increasing volatility.”
Other key findings include:
- Despite challenging headwinds, the Canadian property and casualty (P&C) market ended 2022 with a healthy combined ratio of 85.44%, positioning the market to focus on strategic growth in 2023
- Canada experienced two of the top 10 global catastrophic events with the May derecho in Ontario and Quebec, and Hurricane Fiona, making it the third worst year for insured losses in Canadian history with an estimated $3.1 billion.
- The rise in reinsurance rates following challenging reinsurance treaty renewals has undoubtably impacted the Canadian property market, causing more strain on pricing and capacity for primary insurers. Insurers are managing their natural catastrophe exposures through such means as reducing capacity and placing sub-limits for weather events.
- There is a continued focus on valuations and clients should expect this to be a focal point during their renewal process.
- The sources of business disruption for companies have become a myriad of interconnected, complex, and diverse challenges contributing to a material increase in the cost of business interruption claims, causing it to be one of the top concerns for companies in 2023.
- What was once considered ancillary documentation, environmental, social and governance strategy and performance is now a baseline for a fulsome submission.
- The improvement in risk mitigation practices and cyber security controls have contributed to more favourable cyber market conditions.
Click here to access the Spring 2023 Canadian Insurance Market Update.