Here is a roundup of key insurance developments in Canada, targeting professionals in the industry for September 2024:
1. Regulatory Updates
The Canadian insurance sector is undergoing major regulatory changes, especially with regard to climate-related risks and third-party risk management. The Office of the Superintendent of Financial Institutions (OSFI) is focusing on climate-related disclosures through Guideline B-15, requiring insurers to address and manage the financial risks associated with climate change. Additionally, OSFI is enhancing its guidelines for model risk management and third-party risk, particularly as it relates to cybersecurity【15†source】.
2. Cyber Insurance Growth
Cyber insurance continues to grow rapidly in response to increasing cybersecurity threats such as ransomware attacks. The global cyber insurance market is projected to grow from $11.9 billion in 2022 to $33.3 billion by 2027. In Canada, the insurance industry is grappling with balancing these growth opportunities against the rising costs of covering such risks【15†source】. As more businesses seek coverage for cyber risks, insurers are facing challenges in underwriting these policies and managing the reinsurance needed to cover potential large-scale incidents.
3. Mergers and Acquisitions (M&A) Activity
While economic uncertainties have slowed large-scale M&A activities among major insurance carriers, private equity interest in Property and Casualty (P&C) brokerages remains strong. The Canadian P&C market continues to attract foreign investment, particularly from private equity groups in the U.S. and Europe, as the fragmented nature of the market offers ample opportunities for consolidation. As the economy stabilizes, it’s expected that M&A activity will resume in earnest, with a focus on digital innovation and automation【15†source】.
4. Technology and Innovation
Canadian insurers are increasingly adopting technologies like artificial intelligence (AI) and machine learning to modernize their operations. Insurers are using AI to optimize claims management and enhance customer interactions. As inflation and cost pressures mount, leveraging technology to improve capital efficiency and reduce operational costs has become essential. The use of data analytics also allows for better risk management and more personalized insurance offerings【15†source】【14†source】.
5. Talent and Workforce Shifts
Attracting and retaining top talent remains a priority for insurance companies. By 2025, Millennials and Gen Z will make up more than 60% of the workforce. These generations prioritize diversity, equity, and inclusion (DEI) initiatives as well as continuous skills development. Insurers that focus on creating equitable workplaces and providing meaningful growth opportunities are more likely to succeed in attracting top talent【15†source】.
These trends underscore the dynamic and evolving nature of the insurance landscape in Canada, with key drivers being regulatory shifts, emerging risks, technological innovation, and workforce changes.
