The Effect of the Pandemic on Commercial Insurance Rates in Ontario
The COVID-19 pandemic has affected industries around the world and insurance is no exception. (To check out all of our posts about insurance and COVID-19 click here).
A challenge that has cropped up in the business world is rising rates in commercial insurance coverage. Small businesses across our province have already been dealt blow after blow in running their companies during these times, with lockdowns and shutdowns, a slew of new operational protocols and provincial health mandates to follow. Now many of these businesses are struggling with a new problem – getting access to insurance coverage they can afford.
Why business insurance rates are rising
Concerns are being raised across our province in regards to skyrocketing commercial insurance rates. Some businesses are even being denied coverage completely – restaurants and bars in particular have been struggling to get insurance. And some insurers are bowing out of the commercial sector completely, or no longer serving hospitality businesses such as restaurants, hotels, and event venues. Given the high risks of these types of locations during the pandemic, and the potential liabilities, insurance companies are seeing these types of businesses as too great a risk.
Even prior to the pandemic, the business insurance sector has reported high catastrophe losses, underpricing as well as challenges with ROI thanks to the low interest rate environment. Throw a pandemic into the mix and an industry already facing challenges is only getting shakier.
UPDATE: October, 2021 – check out this post for the latest on business insurance rates in Ontario and what your business can do if it’s having trouble finding coverage.
What the Ontario government is doing
Premier Ford has also acknowledged what is happening with business insurance in his province and has warned of regulation if the insurance industry does not step up to help businesses get access to the coverage they need. He even went so far as to use the word “gouging” in reference to what has been going on (click here to access some his strong words for the industry). Currently the Ontario government does not regulate commercial insurance as they do auto insurance, but has not ruled out this possibility.
Finance Minister Rod Phillips has been in touch with the heads of insurance companies in our province, urging them to take action. He has also been discussing the situation with the Financial Services Regulatory Authority of Ontario. The provincial budget he is preparing will also address this issue.
The mayor of Toronto, John Tory, has also asked the provincial government to step in and protect eating establishments and food delivery companies.
What the Insurance Bureau of Canada is doing
The IBC has announced that it has launched a team to address the rising costs of commercial insurance. This team will look at what kind of support businesses need and help them find coverage that they can afford. The team will be starting with hospitality businesses in Ontario.
The CEO of IBC Don Forgeron stated: “We have a shared interest in making sure that as many small hospitality businesses as possible in Ontario can find the insurance they need – even in a time of heightened uncertainty and risk.” (Source: Canadian Underwriter)
A more recent development has been IBC’s commitment to supporting businesses in the hospitality industry. Click here to learn more about how they are trying to address rising business insurance rates in the hospitality sector and challenges with finding coverage at all with many insurance providers pulling out of the space.
Time will tell how things will play out for commercial insurance. We can only hope that steps will be taken to help businesses weather the storm of the pandemic, when it comes to insurance coverage, and across the board.
There is still plenty of competition in the business insurance space, so be sure to shop around when looking for coverage. If you would like to discuss options for your business, please reach out to one of our insurance professionals. Send us a message online here or give us a call at 416-346-2814.
Resources referenced from the Canadian Underwriter:
- Insurers pledge small business help as pressure mounts to address rising rates
- How IBC plans to help restaurants find insurance
- Ontario promises action to address rising commercial insurance rates, critics urge regulation
- Why reinsurers are now ‘hesitant’ to support some Canadian insurers
Image source: FreeDigitalPhotos.net | Stuart Miles