Rising insurance costs are a challenge for Canada’s small businesses – report

Against the backdrop of the ongoing COVID-19 pandemic, small businesses in Canada are finding it more difficult to keep up with their insurance costs – let alone secure coverage – according to a new report by the Canadian Federation of Independent Business (CFIB).

According to CFIB’s Business Barometer report in July, 55% of Canadian small businesses indicated that insurance was a “major cost constraint,” outpacing other typical business concerns such as wages and taxes. Another, more recent survey conducted by CFIB this month, found that businesses in the transportation (87%) and hospitality (82%) sectors were the most likely to report premium increases.

“Small businesses are often required to have insurance, but it has become increasingly difficult and costly for them to get coverage,” commented CFIB vice president of national affairs Jasmin Guenette. “CFIB has observed an increase in business concerns with commercial insurance costs since mid-2019, but many firms are now reporting that their rates are going up steeply, that they can’t find an insurer at a reasonable price, or even at all.”

Premium increases are not the only insurance-related problem faced by small businesses. CFIB also found that one in five businesses (19%) who indicated that they were looking around for insurance said they were unable to find an insurer that is willing to provide coverage for their needs.

CFIB stated that it has been in talks with the Insurance Bureau of Canada, and has made several recommendations, such as:

• Additional efforts to ensure all Canadian businesses have access to affordable commercial coverage.
• Premium relief through support programs as businesses reopen and start generating revenues.
• Timely information for commercial insurance clients on renewals and on how to best manage risks and costs of insurance after months of lockdowns.
• Updates to the Insurance Code of Consumer Rights and Responsibilities to take into account the current reality of the market.

The trade group is also calling on all provincial governments to implement liability immunity to support small businesses acting in accordance with COVID-19 public health guidance as they gradually reopen. Some provinces have already implemented temporary liability immunity, but CFIB maintains that all provinces should follow suit.

“It’s important to find short and long-term solutions to make sure small businesses have access to affordable commercial insurance. CFIB stands ready to work with the industry and government on ways to ensure just that,” said Guenette.