When asked how I would characterize the Canadian commercial and personal lines markets heading into 2025, the most honest answer that comes to mind is: it depends.
It depends on whether the strong underlying performance of some key markets over the last few years will continue. Beneva is mostly concentrated in Quebec, with some exposure in Ontario. When we exclude catastrophic losses, the two provinces have exhibited solid underwriting performances in both commercial and personal lines, with Ontario auto being a notable exception. We believe such market performance should spur competition, which can only be good for customers.
It also depends on what Mother Nature has in store for us over the next 12 months. Natural catastrophes can easily overshadow strong underlying financial performances. Statistics on disasters that hit Canada this summer are stunning: four major disasters caused more than 228,000 claims and over $7.6 billion in insured damages. The challenge we face due to these catastrophes is not only financial, but also operational. Under these circumstances, insurers must show tremendous agility and handle a large volume of claims over a short period. This calls for innovative thinking and flexibility; not only from insurers, but also claims providers, regulatory agencies and all levels of government. Something to ponder as an industry as we prepare for the next major event.
One last consideration is the reinsurers’ reaction to these climate-related events. Reinsurance conditions have already been a topic of discussion in recent years, but the four major events of 2024 will certainly focus the discussion. We all know reinsurance is a global business and decisions are not driven by what happens in Canada, or even North America. We will see how the discussion plays out over the next few months; a substantial increase in pricing would likely result in a tightening market.
I like to think climate change is challenging us to do better for our policyholders. This issue affects all Canadians and we need to address it collectively as a society. We can’t just sit and watch. We need to roll up our sleeves and act!
