Economic and social inflation, geopolitical tensions, rising catastrophic weather losses, along with continued supply chain and labour challenges are all contributing to a conservative market environment in Canada, according to global professional services firm, Aon plc.
The company’s 2023 Fall Canadian Insurance Market Update says by the end of the second quarter in 2023, there were approximately $760-million in insured catastrophe losses. “Despite more orderly mid-year reinsurance renewals, catastrophic weather events are having a material impact on the market.” The report further looks at persisting rate increases, valuation scrutiny and capacity contractions, as well.
“Underwriting continues to be highly individualized with risks in susceptible geographies and perceived high-risk exposures experiencing the most acute and significant market challenges,” they write, saying there is also a continued focus on the part of insurers, on valuations. “Clients should expect this to be a focal point during their renewal process.”
The casualty market, meanwhile, “is observing a return of capacity and larger limits, particularly in the excess market.”
In Canada, they say the market is in a transitional space. “A conservative market environment continues,” they state. “However, there is optimism within the market with moderate competition returning as insurers look for growth opportunities with a particular emphasis on well-performing risks.”
In examining withdrawals of some companies for property and catastrophe reinsurance, they explain, saying “several reinsurers continue to focus on de-risking their property portfolios, rather than growth. Investors remain concerned by long term challenges, most notably the impact of climate change. This appears to be the driver of a reticence to deploy new capital.”
The report concludes with a look at industry trends, including those in the public sector, Indigenous communities, in cyber, technology and error and omissions insurance, real estate and manufacturing.
