Warren Buffett is expanding into the Canadian insurance market – bringing in big coverage rates to shake up the industry.
Commercial insurance company
Berkshire Hathaway Specialty Insurance is expanding into Canada, just three weeks after it entered the US market, reports the Toronto Star.
“Our entry to Canada is consistent with our global ambitions,” Berkshire Hathaway executive vice-president David Bresnahan told the Star. “We think the Canadian insurance marketplace is a wonderful marketplace to operate in and we find it caters to underwriting companies that can be creative and responsive.”
The company has picked up licenses to operate in Hong Kong and Singapore in the past few months, signalling an ambitious expansion effort by Buffett for his trademark approach to rapid moves.
Bresnahan added that the company will probably operate with an average $25 million limit in most markets, but has the ability to offer coverage rates of more than $100 million for clients it has a “confident underwriting view on.”
Pete Karageorgos, the director of the Insurance Bureau of Canada, said that Buffett should be aware of the differences between the Canadian and U.S. markets, especially when it comes to regulatory oversight.
Karageorgos said that if Berkshire Hathaway hasn’t “done their homework” they could end up like Target.
Target had expanded into the country with great fanfare two years ago, only to announce that it would be closing every Canadian store earlier this month.
“The (Canadian) insurance market is already very very competitive, particularly when you look at property insurance” Karageorgos told the Star. “When you look at the US though you might have one or two large players that hold 20% or 30% of a market in a state and that is not the situation here because our market is much more fragmented.”
