New tariffs on steel and aluminium are forcing insurers to reprice policies before construction costs surge and replacement claims significantly impact the profitability of their books.
The cost of insuring buildings is rising again—this time, driven by a fresh wave of tariffs on imported steel and aluminium introduced by the Trump administration. The measures arrive just as the industry was beginning to recover from a historic surge in construction material prices during the pandemic.
According to Statistics Canada, the Industrial Product Price Index for fabricated metal and construction materials rose nearly 45% between January 2020 and June 2022. While prices had begun to stabilize, the effects of the pandemic linger—and new trade policies are once again pressuring insurers to revisit how they price coverage, particularly for replacement and repair costs.
From re-evaluating rental car limits to adopting real-time property valuation tools, Jordan Switzer, director of insurance operations at Oracle RMS, says brokers, underwriters and insurers are making quiet but significant adjustments. In a market defined by caution, Switzer believes service—not just pricing—may be where the real competition plays out.
“It’s going to have more of an impact on pricing,” Switzer said. “Brokers and underwriters alike will need to make sure we’re accounting for these changes in calculating replacement costs.”
These rising material costs may also alter how insurers perceive different types of construction. Steel buildings, once favoured for their fire resistance and perceived durability, may lose some of their appeal as repair costs continue to climb.
“Maybe those markets that were clamouring for steel buildings may not actually be as interested,” Switzer said. “Maybe they’re going to go the other way, and frame construction buildings [will] become more desirable or priced more inexpensively than a steel building.”
Even as cost pressures mount, Switzer doesn’t expect drastic changes in eligibility criteria. Instead, he believes attention is shifting toward pricing and loss prevention.
“It’s not going to be a question of eligibility,” he said. “It’s pricing the risk adequately and also [knowing] how to prevent a claim from ever occurring.”
The aftermath of the pandemic continues to cast a shadow over supply chain stability, especially in claims management. Although there haven’t been major delays yet, Switzer says the industry remains cautious, referencing the complications experienced during the height of COVID-19.
To cushion the impact of prolonged repair times, some insurers are adjusting their coverage models. One Canadian insurer, Switzer pointed out, has moved from a fixed dollar amount for rental car reimbursement to a time-based structure.
“Instead of a standard $1,500 cap, the policy now provides 30 days of coverage, mitigating uncertainty for both insurers and policyholders,” he said.
Home insurance is experiencing similar strains. Rising costs for temporary accommodations and delayed repairs are making additional living expenses a heavier burden on insurers. On the commercial side, business interruption claims pose an even greater challenge as companies navigate extended repair periods.
“Clients who can’t live in their home because of a claim now need to rent additional spaces or live in a hotel, and that’s an additional cost for insurers,” Switzer said. “On the commercial side, business interruption claims will be a challenge as insurers try to push repairs forward quicker.”
Brokers also play a pivotal role in managing client expectations, ensuring that communication remains transparent throughout the claims process.
“Communication from brokers working with their insurer partners is key,” Switzer said. “It’s about advocating for the client, pushing timelines forward, and providing updates on delays and expected repair times.”
Ontario’s insurance market continues to grapple with broader economic issues, such as inflation. Despite these challenges, Switzer doesn’t foresee a wave of policy overhauls or new product launches.
“I’m not sure that they will restructure policies per se, or even maybe develop new ones,” he said. “They choose pricing based on a multitude of factors, and you get what you pay for.”
Still, some insurers are finding new ways to differentiate themselves, especially through data-driven innovation. One company, Switzer said, uses environmental metrics to fine-tune home insurance pricing—even between two seemingly identical houses.
“You could have two houses right beside each other, same size, same year built, but they’re different prices because the grade of the land is 1% higher up,” he said. “That’s the kind of innovation we’re seeing.”
Since the core products across insurers are often the same, especially in regulated segments like auto insurance, Switzer believes customer service is the real differentiator.
“We all sell the same product, especially on the auto side,” he said. “It really is just our service and what we can do to help our customers and be there for them.”
And with personal insurance premiums rising alongside small business closures, many clients are feeling the pinch. The economy is a challenge that many consumers are facing, so consulting a broker who can provide choice and solutions is a key piece of advice for customers, Switzer said.
“Clients are struggling with payments,” he said. “If you miss a payment and your policy gets cancelled, it only compounds the problem because your next policy gets even more expensive. It’s a never-ending cycle, and we’re trying to help our customers through it.”
