Commercial insurance premiums in Canada are expected to continue climbing in the second half of 2021.

Aon makes this prediction in its Insurance Market Report Canada for mid-year 2021.

“Challenging market conditions from 2020 continue to impact rates in 2021. We are seeing on average 10-25 per cent increases on clean accounts. Difficult segments such as seafood, realty, frame, or distressed risks continue to see upwards of 40 per cent increases in rate or more," say Aon's brokers.

They add that “as is” account renewals will be very rare in the next renewal cycle. Accounts with losses could see rate increases upward of 30 per cent. 

In addition to the real estate and seafood processing markets, hospitality is also being hindered by capacity reductions. For other risk classes, however, the London market is starting to open with fresh capacity for the Canadian market.

“Adverse weather, devastating snowstorms, hurricanes, or severe wind is impacting capacity and deductibles applied. COVID-19 has also posed challenges for hospitality, travel, and entertainment risks,” the review continues.

The new risks of working at home  

They analysts point out that the home-based work resulting from the pandemic poses risks that have not been adequately addressed. What happens if the equipment brought home malfunctions and causes damage? Whose insurance policy will cover it, the employer or the employee’s? What if the employee is a tenant and does not have insurance? Companies need to look into this matter and inform their underwriters accordingly, Aon brokers advise.

They also note that insurers' underwriters are requiring more information than in the past. “Risk control reports are vital as a result of the market conditions. Many insurers are pushing for engineering reports and inspections. Renewal terms have been subject to the insured’s compliance with the above as well as outstanding recommendations,” Aon points out.

The 120-day renewal cycle may seem excessive for some commercial clients, but they would do best to follow it, Aon brokers say, noting that “this allows brokers to get in the market early, get answers to additional questions promptly, and ultimately achieve the best possible outcome.”

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