What Trump’s victory means for Canada’s insurance sector

Following his U.S. presidential election win on Nov. 5, Donald Trump’s return to the White House will have a broad-sweeping impact on Canada’s trade, economics, and, inevitably, insurance, industry sources tell Canadian Underwriter. 

Sources suggest a variety of ways Trump’s re-election could touch on Canada’s property and casualty insurance sector, including geopolitical and economic risk, reinsurance rates, and regulation.  

Geopolitical and economic risk 

“Trump’s election victory is poised to significantly influence both Canada and the broader geopolitical landscape,” says Aliya Daya, senior client executive at Acera Insurance.  

“His return to the presidency is expected to introduce significant changes in international trade policies, defense commitments and diplomatic relations, with notable effects on Canada and the global geopolitical environment,” she said in a written statement to Canadian Underwriter.  

For example, if Trump were to impose stricter trade or regulatory policies, this could affect clients or companies with cross-border business. 

During his election campaign, Trump proposed blanket tariffs of 10% to 20% or more. Given that nearly four-fifths of all Canadian trade goes to the U.S., this could have a profound effect on commercial brokers’ clients. 

Clients in the auto, energy, and chemical/plastic/rubbers manufacturing sectors would be among those who feel the deepest impact, since between 80% and 95% of exports in their sectors go to the U.S. 

Such changes could also disrupt the supply chain, increasing costs and delaying shipments.

“Knowing that Trump’s administration may reintroduce tariffs on Canadian exports, brokers should advise clients to evaluate their supply chains and consider trade credit insurance to mitigate potential payment defaults,” Daya says.  

Brokers might also recommend clients review or update their political risk insurance programs “to cover scenarios like expropriation, currency inconvertibility and political violence,” she advises.  

More generally, Trump’s re-election may offer brokers a window to open more meaningful conversations with clients.  

“Brokers should be advising clients on creating robust business continuity plans, modeling or assessments for trade related risks, currency hedging strategies, reviewing cross-border regulations and compliance, and monitoring economic indicators for strategic future planning,” Daya says.  

Regulation 

Trump’s economic policies often include regulatory reform; or more specifically, deregulation. Risk and insurance experts will be paying close attention. 

“Whenever [a president-elect] takes the office of President of the United States, there is always angst throughout the risk community about what new legislation will be introduced and what will sunset,” a RIMS spokesperson tells Canadian Underwriter.  

“As this new administration takes shape, risk professionals around the world will be focused on the impacts of new regulation and how it affects compliance, insurance programs, as well as the overall strategy of their organizations.” 

The Canada P&C insurance industry can expect some significant changes to regulations. Companies with cross-border operations may find themselves subject to instability.  

During the final year of his first term, Trump’s administration released a fiscal year roundup of its 145 deregulatory actions and 45 significant regulatory actions. 

He has also vowed to weaken environmental pollution regulations. This comes at a time that Canadian regulators are increasing their environmental regulations. For example, Canada’s solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), is requiring Canadian property and casualty insurers to quantify their physical risk exposures related to climate change and any climate change risks associated with investments they may hold.  

Reinsurance rates 

On that note, Trump’s reported climate change denialism could influence the United State’s natural catastrophe disaster response — which could in turn cause a knock-on effect on Canada’s reinsurance rates. 

“The U.S. has seen far too many devastating severe weather events in recent months and years, including the billions of dollars in insured damage caused by Hurricanes Helene and Milton,” the Insurance Bureau of Canada tells CU in a statement. “This also goes for Canada — with annual insured losses due to severe weather now routinely exceeding $3 billion, Canada needs to get ready for the next disaster.”  

In Canada, natural catastrophe insured losses have topped $7.7 billion and counting, the highest figure seen in the country’s history.

In the U.S., there have been 24 confirmed climate disaster events with losses exceeding $1 billion as of Nov. 1, in 2024. And P&C insurers in the hardest-hit states, such as Florida and California, have begun withdrawing coverage for homeowners and certain lines of business. 

This comes on the heels of 2023, when increasingly severe natural catastrophes, spurred by climate change, proved a significant challenge for reinsurers. Hurricane Ian pushed the market past the brink, causing reinsurers to question if there would be enough supply. Hurricane Ian caused in the range of $52.5 billion in insured losses, mainly in the U.S. Though just one of several factors, it caused reinsurers to increase rates globally.  

Though Canada isn’t without its natural disaster losses, higher reinsurance rates in Canada are often paid in part because of the much larger risk exposures in the U.S., some reinsurance brokers say.

“If you look at Canada as a Cat loss driver in the world, for the last 20 years, we’ve run about $30 billion of insured Cat losses, which is about 2% of the global total,” Don Callahan, managing director of Guy Carpenter Canada, said during a Canadian Underwriter webinar in August 2023. “The U.S. has run [roughly] $1 trillion, for about 60% of the global total.

“U.S. Cat losses for the last 20 years are roughly 30 times that of Canada, and as a result of Canada not being a particularly large market, I think we got caught up in that trend [to raise reinsurance rates because of large Cat losses].”

Republican presidential nominee former President Donald Trump speaks at an election night watch party, Wednesday, Nov. 6, 2024, in West Palm Beach, Fla. (AP Photo/Julia Demaree Nikhinson)