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Forward-looking insight on the Canadian P/C casualty market is marred by uncertainty. While the ratings agency A.M. Best has seen stability in the insurance industry in years past, the future is harder to pin down as emerging risks come to the forefront.
Cyber insurance has been a popular buzzword and while the global cyber market is expected to double in size by 2020, there is still uncertainty in this line, particularly as many insurance experts predict higher cyber-related losses in the coming months, according to Willis Re.
“Those who provide commercial packages find that they do need to provide cyber coverage in order to keep up. If they don’t provide it as part of their package, somebody else will,” said Raymond Thomson, associate director at A.M. Best, adding that the actual damage from cyberattacks has yet to be seen, specifically quantifiable losses versus long-term reputational consequences, and that many companies continue to be at a disadvantage compared to hackers. “The bad guys are one or two steps ahead of the good guys in almost every instance.”
From the web to water, overland flood products are now available in Canada, though it won’t help all residents and businesses.
“It may not be affordable. If it’s priced properly, there may be many people in various places in flood plains [who] are going to get priced right out,” said Thomson. At the same time, the question of whether subsidies should be offered to those who live in areas more impacted by floods continues to be up for discussion.”
Gloom and doom aside, some insurance professionals may find increased opportunities in commercial cannabis insurance as the date for legalization approaches. It’s potentially a big money business, said Thomson, though what will be legal across regions is still being determined.
“The appetite is all over the spectrum,” said Thomson, referring to A.M. Best-rated insurance companies. Some see a chance to provide risk mitigation and coverage to the sector, but the scale of opportunity remains to be seen.
One area that’s developing and has the potential to help the insurance industry is the growth in insurtechs and tech-based offerings. While we’re still in the early days of innovation in this sector, disruption is coming, according to Thomson.
“Data available for pricing and for claims is just expanding,” he said, pointing out the rise of usage-based insurance, and key players who are looking to innovate their offerings and customer-facing products, though as with most forward-looking insight, the full scope of risks and appetite for these solutions has yet to be fully recognized.
