In February 2020, on the eve of the COVID-19 pandemic, the Insurance Bureau of Canada (IBC) created a national task force to find solutions to the plunge in underwriting capacity that has afflicted the commercial insurance market for several months.
Submitted in May, the task force’s final report was recently made public. It contains 53 recommendations. Deloitte Canada acted as a consulting firm in this initiative.
Many recommendations target market segments that have been experiencing coverage availability issues for several years, such as condominiums, trucking, hospitality, which includes bars and restaurants, as well as not-for-profit organizations, which could not easily obtain directors’ liability coverage.
Three main series of measures
The 53 recommendations are grouped into three main areas, the executive summary of the 46-page report explains. They emerged from five roundtable discussions held during 2020.
The first set of recommendations is for the insurance industry, governments, businesses and organizations in affected sectors to continue to share information and work together to find sector-specific solutions for commercial insurance consumers.
The second set of recommendations focuses on the need for insurers and specific sectors, such as trucking, to lobby to jointly advocate for legislative reforms that would positively impact insurance availability and affordability in those sectors.
The third set of recommendations highlights how insurers, businesses and organizations can work together to improve risk management, particularly in terms of availability and affordability.
"No silver bullet"
Don Forgeron, IBC CEO and chair of the task force, concedes that there is no one silver bullet in the report's 53 recommendations. "It is important to acknowledge that the challenges facing Canada’s commercial insurance market are part of a global trend influenced by global events. The Task Force recommendations offer both short- and long-term solutions to help protect Canadian business sectors from these global issues,” he says in the introduction to the report.
He added that this report is not the final word on commercial insurance issues in Canada, which have persisted for more than two years. The P&C industry, through IBC, will deliver a follow-up report in one year, Forgeron said.
“The follow-up report will include an update on engagement with governments and stakeholders on the commercial insurance challenges in specific sectors, progress on the implementation of the Task Force’s recommendations, and any impact on availability and affordability of commercial insurance for businesses and organizations. IBC will also continue to engage with Task Force members regularly in an effort to identify emerging issues and collaborate on potential solutions,” the IBC CEO continued.
IBC says it is collaborating with colleagues around the world, including the Insurance Council of Australia (ICA), which has conducted a similar exercise. Both organizations have committed to sharing their findings.
Support
RIMS Canada, a risk management society, endorsed some of the IBC task force’s findings. In particular, it approved of the recommendations to increase risk management education for consumers, and for organizations to strengthen their risk management strategies.
“In addition to the complexities brought on by COVID-19, organizations across the country and across many sectors are grappling with the challenges of a hard insurance market,” says Rims Canada Council Chair Steve Pottle. “Advocating for our members is at the heart of the RIMS mission and we couldn’t be more pleased to see IBC’s recommendations that include: mandating risk management education, encouraging the development of more consumer-friendly risk management information and that emphasize the importance of a cohesive risk management strategy.”
Pottle concludes his letter by saying that RIMS Canada, which was part of the discussions to produce the task force report, will continue to collaborate with IBC to develop solutions to help businesses.
