The Insurance Bureau of Canada (IBC) has published recommendations for the government to relieve pressures on the commercial insurance industry and promote a business-friendly environment.
In its report, “Fuelling business prosperity—government’s role in fostering a sustainable commercial insurance market,” the IBC highlighted reforms and initiatives to reduce tax burdens, mitigate climate risks, reform tort laws, stabilize commercial trucking, and enhance cybersecurity measures.
“A healthy commercial insurance market is fundamental to the success of Canada’s economy,” IBC said.
“Small and medium-sized enterprises make a significant contribution to employment and economic growth. Recent challenges in the commercial insurance landscape have led to difficult market conditions, but governments can play a role in enhancing the market.”
Among the key recommendations are tax reforms to reduce or remove insurance premium taxes and retail sales taxes on insurance products, which increase the cost of insurance and discourage businesses from obtaining sufficient coverage.
The report also stresses the importance of mitigating climate risks through governmental actions such as improving flood defences and amending building codes and land-use planning. Additionally, it calls for reforms in tort law to balance the liabilities more fairly among defendants, thus bringing greater predictability and fairness to the market.
The IBC is also drawing attention to the need for stabilizing the commercial trucking industry. Recommendations include the implementation of policies that improve driver training and address fraud through a centralized database.
Another area where IBC believes the government can contribute is cyber. The report urges the government to lead in establishing robust cybersecurity frameworks through better certification programs and standards for cyber hygiene. The IBC report also advocates for the government to promote regular and comprehensive risk management reviews by businesses.
By incentivizing these practices, governments could significantly reduce potential losses and lower insurance costs, ultimately fostering a healthier commercial insurance ecosystem that supports the wider economy and contributes to Canada's economic prosperity.
According to IBC data, the commercial insurance sector contributed nearly $15 billion to Canada’s gross domestic product in 2022 while providing about 115,000 full-time jobs.
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