Business insurance market in Québec

In Québec, businesses have a number of needs that the business insurance market meets, making it possible for them to conduct their operations with confidence. However, some businesses in certain industries may find it difficult to obtain insurance.

The premiums collected from all policyholders are used to pay losses, but they may not be sufficient to cover the cost of claims. When this is the case, premium increases or adjustments of the terms and conditions may be necessary to continue offering insurance coverage to certain businesses.

Difficult economic conditions combined with a prolonged period of generally increasing number and cost of claims can lead to what is known as a hard market: Access to insurance and some coverages may be more limited, and the premiums and deductibles charged may be higher.

Such situations, as well as many losses, can be avoided by better business risk management.

The purpose of business insurance

Insurance protects businesses from sudden and accidental events that can disrupt their operations.

Regardless of size, all businesses should have property, business and civil liability insurance to operate. These help to avoid major financial problems should losses occur or lawsuits be filed against them.

Where risk is significantly higher or losses increase, a situational and risk factor assessment can help a business regain control of the situation.

Risk factors

Every company is exposed to different risks. Even if a company has insurance, it must know what risks it faces and manage them.

Indeed, many factors that increase risks are the same from one business to another:

  • Lacking knowledge of the risks inherent to specific business operations
  • Exposure to lawsuits
  • Deficiencies in business conduct or negligence (inventory, security, etc.)
  • Lacking management experience
  • Lacking preventive maintenance
  • Outdated equipment
  • An inexperienced or unskilled workforce
  • Lacking training for managers and employees
  • Deficiencies in production and working conditions
  • Unprotected or obsolete technology that increases cyber risks.

All these factors increase the risk of losses or claims that can cost a great deal of money.

In addition, there are external factors, such as natural catastrophes, that businesses must be prepared for.

Tightening insurance conditions

Tightening insurance conditions generally result in the following:

  • Reduced offer of certain protections
  • Stricter underwriting criteria
  • Higher premiums and deductibles for a risk deemed to be greater
  • Reduced number of insurers in the market

 

When the risks are too great, insurers can also share them. A business is then insured by several specialized insurers with a so-called “subscription policy.”

Through this means, businesses can access the insurance coverage they need to continue operations.

Reinsurance and its impact

To manage their many risks, insurers can share them with other insurers, which are called “reinsurers.” The reinsurance market is international and influences the commercial insurance market in Québec and Canada.

Reinsurers at times review their standards and conditions for insuring insurance companies. Certain reinsurers’ withdrawal from or repositioning in Canadian lines of business, for example, may have significant consequences for the insurance market across the country. They therefore have an impact on the conditions that insurers offer their clients, especially businesses.

With risk management, everyone wins

Regardless of the type of business or organization, risk management helps to better prepare for and prevent losses, but that’s not all. It also helps to:

  • Clearly identify the risks to which a business is exposed
  • Assess and prioritize all known risks
  • Develop appropriate corrective measures
  • Establish an action plan

By following a detailed plan, it’s easier to take appropriate action.

Without eliminating all risks, a risk management plan demonstrates responsible management and a commitment to loss reduction and prevention. It gives a good image of a business to employees, industry stakeholders, customers and the public.

 

Risk management integrated into a business plan is key to having better access to insurance.

 

For more information, please visit the Risk Management page on Infoinsurance.ca.

What IBC does

To support businesses, IBC:

  • Works with insurers and key stakeholders in troubled sectors to understand the issues.
  • Provides support and participates as necessary in coordinating committees to identify measures that can reduce and prevent losses.
  • Participates in implementing support services for consumers and businesses that facilitate access to insurance.
  • Makes recommendations to governments and various stakeholders on the implementation of standards and practices likely to improve access to insurance for certain industries.

In recent years, IBC has worked with the trucking and co-ownership syndicate industries. More recently, it also provided support and guidance to some private seniors residences during the pandemic.

Finally, IBC works nationwide and collaborates on work that can improve access to the insurance market across the country and in the province.