Canadian Commercial Insurance Market Analysis
The Canadian small and midsized enterprise (SME) commercial insurance market remains highly competitive, according to Marsh Canada’s ‘Market Perspective’ report. Intense competition among insurers and brokers is expected to keep the market soft throughout 2013. SMEs are particularly attractive clients due to their typically lower risk profile, as they usually don’t have catastrophic exposure or international risks.
What’s Driving SME Market Competition?
Marsh’s Canada Insurance Market Report 2013 explains that SMEs’ limited reliance on reinsurance partially shields them from global reinsurance market fluctuations. The absence of U.S. or international exposure in most SMEs further reduces their risk profile, making them desirable clients. This has led to significant price competition, with premium rates being undercut by up to 30-40% to gain market share.
Market Trends: What’s Hot
- Real Estate E&O Insurance: Growing demand, with insurers underwriting asset managers more stringently than property managers. Crime insurance remains competitively priced.
- Captives: Despite the soft market, captive insurance companies are on the rise, partly due to Canada’s recent Tax Information Exchange Agreements with Bermuda and the Cayman Islands.
- Environmental Insurance: The market is growing, with over a dozen insurers offering coverage. Lloyd’s insurers are increasingly providing environmental coverage for Canadian risks, with improved terms and sector-specific forms available.
Market Trends: What’s Not
- Energy Insurance: Despite capacity oversupply, significant losses are causing underwriters to be more conservative, leading to higher rates and deductibles for larger companies.
- Credit Insurance: Economic turbulence in Europe and slower growth in emerging markets have halted the softening trend. Major defaults in Europe remain a primary risk concern.
- Financial Institutions: Rates are expected to trend upward in 2013. Insurers are becoming more selective about professional liability coverage and trying to maintain Financial Institutional Bond rates.
Marsh Canada’s comprehensive 31-page analysis provides detailed insights into these and other specialty markets in Canada, offering a nuanced view of the commercial insurance landscape.
