By: Luke Jones, Published on July 3, 2017 02:26 PM, Last Update on July 31, 2017 11:28 AM
Canada’s insurance market is stalling, but the industry should not be too worried yet. Through the first quarter of 2017, the country was hit hard by floods and with the wildfire season now happening, the outlook is not too promising.
Flat growth through the first quarter was driven by poor climate conditions in the most populated provinces, and an auto insurance industry that is going through uncertain change. Premium growth was stagnant, putting pressure on brokers.
Joel Baker, President and CEO of MSA Research and CatIQ, says brokers must now work for their customers:
“Brokers have to be aware that more than ever they have to earn their business,” Baker said. “The adage goes: ‘if it can go direct, it will go direct’. Brokers must continually add value to remain relevant and valuable to both their clients and the insurance partners that they work with.”
While growth is stalled and income down, Baker believes the insurance industry is in good shape:
“There are rapid developments on the technological front that are in the process of transforming the market,” he pointed out. “It is an industry that serves a definite need in times of escalating CAT losses. The industry is changing but there are definite reasons for optimism for those that adapt the best.
“The industry is not in immediate danger. It is well capitalized and the way it emerged from the Fort Mac disaster is a testament to its risk management acumen - though had the fire losses been larger it would have threatened the solvency of some players. In the long term, as profits erode and capital levels go down, rates will naturally harden. In a hard market most of the industry does well - in challenging times only the best companies thrive.”