Canada’s insurance sector will continue to face a conservative market environment due to uncertainty surrounding catastrophic weather, inflation, geopolitical tensions, and supply chain and labour issues, according to a new report from Aon.
Aon’s 2023 Fall Canadian Insurance Market Update highlighted significant challenges facing the property market, which has been heavily impacted by recent natural catastrophes. Canada has seen approximately $760 million in insured catastrophe losses by the end of the second quarter.
Aon said the property market also witnessed rate increases, valuation scrutiny, and capacity contractions. At the same time, underwriting has become highly individualized, with areas susceptible to natural catastrophes and perceived high-risk exposures facing the most significant hurdles.
“The challenges in the property market continue to be a focal point throughout 2023, primarily driven by natural catastrophe concerns and reinsurance costs,” said Russell Quilley, head of Commercial Risk Solutions and chief broking officer for Canada at Aon. “Climate concerns will be heavily weighted in underwriting risk exposures, increasing the need for sophisticated modeling and risk quantification tools to better understand and manage risk.”
Amid the uncertainty surrounding Canada’s insurance market, Aon found that insurers emphasize well-performing risks and focus on strategic growth opportunities. Insurers have managed their portfolios by meticulously selecting risks and strategically deploying capacity.
Other findings in Aon’s report include updates on the casualty insurance market, which has the return of capacity and larger limits, particularly in the excess market.
The cyber insurance market has also been competitive due to improvements in insurer loss ratios and global capacity expansion, Aon said.
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