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The Insurance Market Blues Those suffering aren’t alone… by Andy Schwartze Anyone who has been involved in the Canadian insurance market over the past few years is well aware of the rising prices. Since the famous flood July 2013, numerous weather events have fed into this “seller’s market” and the pandemic has only exasperated it further. Here’s a breakdown of why the market has become so challenging for buyers: 1. Weather events in North America have multiplied in number. Western fires, eastern floods, tornados, and hurricanes have all risen in frequency. As an example, by the end of June, the U.S. Weather Service had already logged close to 1,000 tornados. Fire events out west need not be recounted, as the dry areas are becoming dryer and the wet areas more water sodden. This was predicted 20 years ago and seems to be a new reality. 2. COVID-19 is on its way to becoming the next generation’s asbestos. By the end of June 2021, over 500 class action suits had already commenced south of the border. These actions comprise attempts to force business interruption policies to pay COVID losses. Additionally, there have been actions stemming from allegations of inappropriate care taken by companies and staff to adequately shield customers and 28 | Canadian Apartment | Part of the REMI Network |
employees from the pandemic. In France, an early case found in favour of a restaurant that sued its insurer (Axa) for business losses. In the UK, regulators studied 19 versions of business interruption insurance policy wordings and concluded that a number of them should be held to pay COVID revenue losses. 3. Insurer “capacity” worldwide was significantly impacted when in January Lloyds of London, the largest p&c insurance provider in the world, announced the intention to withdraw significant “capacity” from the market. This meant that the availability of insurance coverage was being significantly lowered—and we all know what happens when demand remains and supply dwindles. Much higher reinsurance costs have been pushed down to the retail level, thereby raising rates sharply. Reinsurers are in business worldwide and that impact on Canadian insurance buyers is unavoidable.
