Canada's Insurance Market: A Global Perspective
Canada continues to hold a strong position in the global insurance market, ranking eighth worldwide by total premium volume. According to a recent study by the Swiss Re Institute, Canada’s insurance market reached a total premium volume of USD $171 billion in 2023, reflecting a 2.8% increase from the previous year.
Canada’s Market Share and Growth Projections
Canada’s share of the global insurance market remains steady at 2.4%, consistent with 2022 figures. Looking ahead, the Swiss Re Institute projects that the Canadian insurance market will expand further, with the total premium pool expected to reach USD $176 billion in 2024 and forecasted to grow to USD $185 billion by 2025.
Global Leaders in Insurance Markets
On the global stage, the United States and China continue to dominate as the largest insurance markets, with total premiums of USD $3.2 trillion and USD $724 billion, respectively. These giants set the pace for the industry, but Canada's steady growth signals its resilience and importance in the global market.
Resilience and Profitability in the Insurance Industry
The global insurance industry has weathered recent challenges and now appears to have reached a new equilibrium. As Jérôme Haegeli, Swiss Re’s Group Chief Economist, noted, the global economy’s unexpected resilience has paved the way for growth and improved profitability across the insurance sector.
The life insurance sector, in particular, stands out as one to watch. With higher interest rates driving investment income and increasing consumer demand for annuities, more individuals are securing their retirement incomes. This trend indicates a healthy outlook for life insurance moving forward.
Property & Casualty Insurance Outlook
On the Property and Casualty (P&C) side, the outlook is equally positive. Despite inflationary pressures that have led to rising claims costs, non-life insurers have responded with increased rates over recent years. This trend is expected to continue for personal lines into 2024, though a moderation in rate hikes is anticipated by 2025.
In the commercial insurance sector, while rate increases have slowed, the market remains robust. In Canada, recent findings by Applied Systems and Aon Canada suggest that rate increases in commonly placed lines of business are trending downward. Yet, profitability is expected to hold steady, particularly in property insurance, where sustainable pricing is evident.
Canada’s Strong Performance in the P&C Sector
Canada’s P&C industry continues to outperform global averages, boasting a remarkable 16.2% return on equity (ROE) in 2023, well above the worldwide average of 10%. This strong performance highlights the resilience of the Canadian market, with an average ROE of 14.4% since 2020.
The Road Ahead: Economic and Industry Forecasts
As we look to the future, major economies are proving more resilient than expected. Global GDP growth is projected to remain steady at 2.7% in real terms in 2024, with a slight increase to 2.8% in 2025. However, the journey towards target inflation levels may not be smooth, as the global trend towards disinflation continues.
For Canada’s insurance industry, these trends signal a positive outlook. As the market grows and evolves, staying informed and prepared is key to navigating the opportunities and challenges that lie ahead.