Report: insurance industry outlook projects limited growth
According to a recently published report from the Conference Board of Canada, the outlook for the country's insurance industry is not a bright one.
The independent research organization has identified several factors that project to hinder the field of insurance going forward. First among those is the reality of more discretionary spending patterns among consumers. In a time where household debt and weak employment/wage increases are highly prevalent, people are less likely to spend on less essential items that require insurance of some sort. The Conference Board's Industrial Trends director Michael Burt cited recreational vehicles and vacation properties as examples of this.
Not only will the industry lose out on benefits from more luxurious forms of insurance, it'll be on the hook for more death benefit claims and less premium collections as a result of an aging population. That is due to the Baby Boomer demographic moving into a senior citizen role within the population.
Next, the report asserts that the Alberta wildfires have caused a significant spike in property and casualty insurance claims. Those led to two consecutive quarters of industry losses, thanks to second quarter claims that rose to over $14 billion.
Barring more unexpected catastrophes, pre-tax profits are expected to stabilize to normal levels this year. The projection for the next five years is that the insurance industry will experience an annual growth increase of 1.3 per cent.
Lastly, the report commented on technological influence within the industry. It conceded that automation and technological improvements will reduce certain employment demands, but the opportunity this creates for insurtech start-ups should be impactful enough to limit industry profitability.