Rising insurance costs have become a serious concern for small businesses across Canada, with more than two-thirds (68%) identifying it as a major challenge, according to a new report by the Canadian Federation of Independent Business (CFIB). The study found that half of small business owners have faced premium increases of 10% or more over the past year, compounding financial pressures amid already challenging economic conditions.
“Commercial insurance provides a safety net for small businesses and protects them against financial losses, property damage or natural disasters. But it’s getting harder and costlier for small businesses to get coverage, at a time where they’re already grappling with many other cost increases,” said Jasmin Guenette, vice-president of national affairs at CFIB. “In certain provinces, businesses also have to pay a tax on all insurance products plus another tax on premiums.”
The report highlighted that the three most common forms of insurance for small businesses — commercial property, commercial auto, and general liability insurance — are also the most expensive. A 10% annual premium increase, for instance, can translate into an additional $1,500 for a typical small business.
Compounding the issue is the lack of affordable alternatives. More than half (56%) of surveyed businesses said they stayed with their current insurance provider upon renewal, citing a lack of competitive options. Additionally, 62% of respondents reported that the majority of available insurance products come from just three companies, limiting market competition.
“While most businesses are content with the customer service they receive and how responsive their insurance provider was, there's still lots of room for improvement,” noted Michelle Auger, CFIB senior policy analyst and co-author of the report.
The CFIB has outlined recommendations to address the growing affordability crisis:
The CFIB also called on the insurance industry to enhance support for small business clients by offering specialized tools, transparency around fees, and incorporating a dedicated small-business chapter in the Insurance Code of Consumer Rights and Responsibilities.
“It’s concerning that small business owners are being charged an arm and a leg for something so vital to their operations,” Guenette said. “It’s up to the governments and the industry to make sure that insurance rates are affordable and there are a variety of options available to small businesses.”
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