Insurance Marketplace Realities 2024 Spring Update – Canada casualty

Rate predictions: Canada casualty

	Trend	Range
General liability, low/moderate risks		-5% to +5%
General liability, high hazard risks		Flat to +10%
Umbrella/excess liability, low/moderate risks		-5% to +5%
Umbrella/excess liability, high hazard risks		Flat to +10%
Auto liability		Flat to +10%

General liability

• Carriers are challenged to adopt alternative or multiple exposure metrics to rate and price against in light of the battle to manage the increases in inflation.
• A noticeable resurgence in multi-line product and cross-sell strategies is emphasizing the establishment of house accounts to capitalize on limited new business opportunities, aiming to strengthen, leverage and cultivate long-term relationships.
• Considerable investments into data and analytics nurture more Canadian-based predictive modeling, construct client integrated solutions and design personalized experiences for clients in support of retention strategies that extend beyond pricing.
• A tightening of contractual liability management focuses on strong risk transfer solutions.
• The growing trend toward implementing self-insured retention structures, application of letters of credit, and use of aggregate deductible arrangements addresses challenges in claim frequency and severity, especially for complex or specialized risk classes.

Automobile liability

• Heightened popularity of the implementation of telematics, usage-based insurance plans and the tracking of distance traveled challenge carriers to consider whether per-vehicle rating represents exposure accuracy.
• We see an expanded focus on use of eco-friendly/electric vehicles, share-economy structures, and employing third parties to reduce fleet operation costs, eliminate supply challenges, and minimize the high demands of fleet maintenance.
• There remains an evident and persistent deterioration in claim trends, highlighted by a significant increase in auto theft and total auto losses, coupled with rising repair and replacement costs attributed to advanced technologies included in most vehicles.
• Carriers closely monitor regulatory developments and work with fleet operators to ensure compliance and mitigate regulatory risks, developing proactive claim reporting procedures, accident investigation protocols and loss prevention measures.

Umbrella/excess liability

• The pace of increases observed on average claim settlements will push insureds to re-evaluate total limit buy given the impact inflationary factors have in challenging values formerly considered sufficient.
• Increase in average underlying automobile attachment points is necessitated by umbrella/excess carriers. Carriers continue to limit their appetites with programs inclusive of U.S. auto exposure.
• Continued entrance of new capacity offers additional alternatives and creates increased opportunities for larger line sizes deployed on excess layers.

Innovation becoming the cornerstone for new growth and enduring customer retention.

• Carriers continue to explore new ways to enhance customer loyalty and satisfaction through more personalized insurance products and intelligent pricing based on individual behavior and risk profiles.
• Industry continues to undergo digital transformation, including evaluating the value of online policy purchasing, digital claim processing, electronic document management, expanding self-service options, real time access to live data and mobile app integration for customer interactions.
• In their development of new insurance products and services, carriers address evolving risks which primarily focus on supply chain disruptions, emerging technologies, and the aftermath of pandemic-related liabilities.

Heightened attention is given to how regulatory bodies and Canadian law will continue to impact and impose on the future of the insurance landscape.

• With increased prevalence of data breaches and cyber threats, regulators are expected to enforce stricter requirements on carriers regarding data privacy, cybersecurity measures and breach notification protocols.
• Climate change, environmental law and sustainability regulations are projected to tighten the protocols carriers will face in the assessment and disclosing of climate-related risks, mandates to integrate climate risk into underwriting and investment practices and the promotion of sustainable insurance solutions — the implementation of which will add complexity and influence carriers’ underwriting criteria, risk assessment models, and product offerings, ultimately felt by the insured.

Marketplace stability and downward pricing pressures will be tempered by the outcomes of another projected record-breaking Canadian wildfire and natural catastrophe season.

• Expectations for a challenging wildfire season in 2024 will impact coverage offerings and pricing throughout the latter half of the year, spurred by the conclusion of a mild winter and an early start to the wildfire season.
• With the increasing frequency and severity of natural disasters, prioritizing long-term sustainability is paramount. Carriers are diversifying their portfolios and taking precautions when investing in high-risk classes and regions.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).