Aon examines what's happening in Canadian insurance market

Aon examines what’s happening in Canadian insurance market | Insurance Business Canada

Insurance News

Aon examines what’s happening in Canadian insurance market

Record year for catastrophes likely to bring about changes

Insurance News

By
Terry Gangcuangco

Aon has published its “Fall 2024 Canadian Insurance Market Update,” highlighting that recent developments – particularly the surge in catastrophe claims in Canada this year – may accelerate a shift toward stricter underwriting and more cautious risk selection.

Key findings from the report include:

Auto insurance pressures – Although increased competition has somewhat improved market conditions, the auto sector continues to face profitability challenges. Persistent auto theft and the rising cost of vehicle repairs are cutting into insurers’ margins.
Underwriting profitability – Strategic portfolio adjustments, focused on achieving “healthy pricing levels” and more thorough risk selection, have led to profitable underwriting outcomes. This was evident in the industry’s second-quarter performance for 2024.
Reinsurance stability – The reinsurance market showed signs of stabilization throughout 2024, with reinsurers demonstrating greater flexibility and a selective appetite for growth. However, catastrophe losses could complicate 2025 renewal discussions.
Casualty market trends – Aon notes that the casualty segment remains competitive and is evolving into a two-tiered structure, with insurers increasingly identifying themselves as either primary or excess providers.

Russell Quilley (pictured), Aon’s head of commercial risk and chief broking officer for Canada, commented on the challenges facing the industry: “The complexity and rapidly evolving nature of the Canadian property and casualty insurance industry makes it extremely difficult to forecast future state.

“While historical market challenges like inflation and interest rate volatility are stabilizing and easing market conditions, catastrophic events continue to pressure the Canadian marketplace.”

Quilley added that 2024 has already set a record for insured catastrophe losses in Canada, with claims exceeding $7.6 billion by September.

As the Canadian insurance market navigates the ongoing impact of natural disasters and other challenges, Aon’s report suggests that 2024 may mark a turning point toward more conservative underwriting approaches moving forward.