Shawn DeSantis, president, CEO, Navacord
It is clear 2024 will bring a new set of challenges, with several themes influencing the Canadian P&C insurance industry.
The economic environment is evolving. Preparing our businesses and successfully managing through the implications of higher interest rates, stubborn inflation, the increased cost of capital and a looming recession will be critical in 2024. These drivers will have broad industry consequences affecting everything from the pace of broker consolidation, valuations, loss costs, market growth and the cost of talent. This will be a much different operating model for the industry.
The marketplace is changing. We are evolving from a hard commercial market into more of a firm market. Capacity is coming back in specific lines of business such as D&O; however, it is still a challenge on large property placements. The challenge for underwriters and brokers will be finding those pockets of opportunity. Strong technical, sector expertise, and market scale will be an advantage in this part of the cycle.
Personal insurance is heading toward a much harder market. The impact of catastrophes on personal property and the ongoing deterioration of the auto portfolio will start to drive rate and underwriting actions. Our industry must continue to be aware of the impact of its actions on clients and be mindful of regulators in this changing personal insurance market.
The industry will learn more about the importance of managing and understanding climate change in 2024. Catastrophes will continue to shape our product offerings and client needs, and stress our claims capabilities. More than ever, we will need to be thoughtful about our decisions for our clients. They are expecting our industry to take a leadership position in helping through the impact of climate change on their assets.
How can we prepare or do things differently?
Savvy brokers must focus on becoming better at taking market share organically versus through acquisitions. This will require:
- better training and development of their risk advisors
- using technology to make operations more efficient
- finding a way to better leverage data for driving decisions
- incorporating AI into their businesses.
Overall, the challenge will be preparing to do business in a more difficult operating environment. We will also start to see large-scale consolidation — both among large brokers and carriers — as scale becomes increasingly relevant.