The 2024 Canadian Insurance Market
As a Canadian consumer, it’s important to be aware of the trends and challenges shaping the insurance market in 2024. Let’s take a closer look at these trends and their impact on consumers and explore possible solutions to help you make informed decisions about your insurance coverage in 2024.
Disruptors to Monitor
The commercial insurance marketplace has faced unprecedented challenges over the past few years, resulting in a hard market and rising premiums. Fortunately, price hikes appear to be stabilizing, and most lines of cover have begun to soften. Indeed, commercial insurance prices declined 1% in the third quarter of 2023, according to insurance broking and risk management company Marsh. Prices may continue to stabilize in 2024. However, several general industry challenges continue to weigh on the market, making accurate pricing predictions difficult. As such, it’s prudent for organizations to understand the trends likely to impact their insurance premiums this year.
4 Trends to Monitor
The commercial insurance marketplace has faced unprecedented challenges over the past few years, resulting in a hard market and rising premiums. Fortunately, price hikes appear to be stabilizing, and most lines of cover have begun to soften. Indeed, commercial insurance prices declined 1% in the third quarter of 2023, according to insurance broking and risk management company Marsh. Prices may continue to stabilize in 2024. However, several general industry challenges continue to weigh on the market, making accurate pricing predictions difficult. As such, it’s prudent for organizations to understand the trends likely to impact their insurance premiums this year.
1. Artificial intelligence (AI)
While AI has disrupted industries and created new opportunities, it’s not without risks. Within the insurance sector, advanced machine algorithms may help insurers develop tailored pricing, streamline processes and drive down costs, some of which may be passed onto policyholders. However, AI can also be weaponized for nefarious purposes, specifically cyberthreats. For instance, AI tools can now formulate sophisticated phishing messages, including convincing deepfake attacks, with minimal effort, leaving employers vulnerable to cyberattacks. Organizations should understand both the risks and advantages of AI to help combat losses.
2. Extreme weather events
Catastrophic weather events continue to cause market disruptions. Bad weather caused more than $3 billion in insured losses in 2023, according to Catastrophe Incidences and Quantification Inc., and Canada witnessed its worst wildfire season to date. Furthermore, the Copernicus Climate Change Service reported that 2023 was the hottest year on record; extreme weather events are more likely due to the effects of global warming. With unpredictable weather, it’s harder for insurers to predict future risks. Therefore, insurance premiums could increase, especially for those in natural disaster-prone areas.
3. Inflation
Although inflation has begun to ease, prices remain significantly higher than pre-COVID-19. For instance, Statistics Canada found that the cost of vehicle parts, maintenance and repairs increased 5.6% from October 2022 to September 2023. Additionally, the construction price of non-residential buildings rose more than 9% in the second quarter of 2023 compared to the year prior, according to database company Statista. Overall, it remains expensive for insurers to cover incurred claims; premiums could increase or policy offerings could change. Organizations must scrutinize policy terms and conditions to ensure ample coverage.
4. Increased crime
The inflated price of goods and services has made certain products increasingly attractive to criminals. For instance, secondhand vehicle values have risen significantly in recent years. Consequently, auto theft increased in Ontario by 31% and in Quebec by 17% year over year in the first half of 2023, according to fraud prevention firm Équité. Other types of crime could also impact organizations in 2024, including employee theft, as the challenging economic climate may tempt otherwise honest individuals into crime to get by. Robust security and risk mitigation measures may be necessary for organizations to reduce losses and achieve the best insurance terms.
To learn more about protecting yourself in light of these trends, contact CMB Insurance Brokers for more information. We can provide valuable insights and guidance to help you navigate this challenging market: call CMB at 780.424.2727 or click here to get a quote.