Canadian commercial and personal lines markets are facing considerable headwinds stemming from higher costs of living, geopolitical unrest, cyber threats and climate change. These headwinds will continue through 2025. Mitigating tailwinds include the industry’s continuing commitment to building resiliency and to investing in technology and innovation such as the adoption of artificial intelligence (AI).
The cost-of-living crisis must remain top of mind. Inflation is easing, but we cannot be complacent. Life is more expensive for Canadian families and businesses. According to the Business Development Bank of Canada, 65% of Canadian companies still feel the negative impact of the rising cost of doing business.
In response, insurers must focus on operational excellence and efficiencies without compromising on service. We need to be financially disciplined to ensure coverage can remain affordable while remaining mindful that customers are still digesting inflation and struggling with higher bills.
Global geopolitical events continue to impact the Canadian market. Exports account for about one-third of our GDP; global conflicts and trade tensions increase supply chain risks. Against this backdrop, Canada’s shift from exporting goods to services continues.
Consequently, the types of businesses we’re insuring is changing, as is how we analyze and price these risks. Across all business lines, supply chain disruptions affect claims service delivery and we need to manage these risks.
Cyber remains a disruptive trend. As connectivity increases, so does vulnerability. Cyber security must be a priority and we continue to see insurers incorporate more stringent mitigation requirements into insurance policies.
Finally, the severity and frequency of extreme weather events in Canada this summer underscores that climate change is an existential issue. We need to double down on efforts to help customers adapt, build resilient communities, and deliver insurance products and claims processes that work in this changed world.
Our industry’s commitment to building resiliency is a tailwind that helps us to add value. So is the continued acceleration of innovation and technological change in insurance, notably the evolution of AI and generative AI.
