The Canadian commercial and personal lines insurance markets are on the cusp of significant transformation as we approach 2025.
The commercial market is highly competitive. The more advanced analytics and data-driven approaches become the norm, the better organizations can assess risk and create policies to meet specific needs. In fact, in many cases businesses are successfully using the technology specifically for the purpose of making good decisions.
At the same time, challenges abound. Cyberattacks and catastrophic weather events continue to plague businesses across industries; and yet, many organizations aren’t certain of the best way to protect themselves from either.
For example, a typical 12-month business interruption policy may not be sufficient to bridge the time between loss and reconstruction, so longer terms may be preferable. Similarly, as the cost of a data breach grows, cyber coverage becomes more critically important, yet adequate coverage may be out of reach for some.
Economic uncertainty is a major stress as well. Struggling businesses don’t have extra cash to secure adequate coverage. Insurers will have to be sensitive to their reticence to win their business. When traditional insurance coverage isn’t available at an affordable cost, organizations need to explore other coverage options to protect their bottom lines, company reputations and people. These alternative solutions may include captives and parametric insurance.
Technology is also a driving force for change in personal lines. Highly personalized and flexible insurance solutions are becoming more common, with organizations using technology advancements and data analysis to provide appropriate solutions to each population segment.
Insurers who prioritize user experience – especially those who are mindful of pricing – will have the edge when it comes to attracting and retaining clients.
Climate change is also impacting the sector, particularly when it comes to home insurance. Given a rising number of catastrophic events hitting provinces across the country, and the costs to repair or replace a home are increasing, homeowners’ insurance is already significantly more expensive than last year. Insurers are reassessing the risks and potentially making pricing adjustments in 2025 as well. Auto insurance is another challenge, with runaway costs related to auto repair, labour and medical bills significantly affecting premiums.
In 2025, both sides of the insurance market in Canada will be shaped by technological advancements, changing expectations and a heightened sensitivity to risk.
