Though consumers have been seeing steady increases in rates for casualty, property, home, and auto insurance, companies have not seen any notable raises in their own insurance costs. Yet.
The sensitivity of businesses to increases for insurance rates runs much deeper, and some new competition has brought some of the business for commercial insurance to Canada. Those two factors have allowed the price of those plans and policies to remain relatively steady over the last few years.
However, according to RSA Canada’s chief executive, Rowan Saunders, this trend will not continue for much longer. RSA has just made a significant investment into the commercial insurance sector in a sizeable way, having purchased GCAN Insurance Company from the Ontario Teachers’ Pension Plan for $420 million. That company holds a notable commercial business. RSA now offers policies to businesses ranging across many industries, from transport companies to gas and oil exploration.
According to Saunders, the true pricing challenge that the company has faced is in its commercial line of products. He explained that “there really hasn’t been any significant price increases to speak of in commercial lines over the past five years.” He also added that there are some areas in which the rates are actually deficient in that sector, and he believes that it will be the next place in which there will be a capacity tightening and some movement in price.
When GCAN was acquired by RSA, the latter became the third largest insurer for property and casualty in Canada, based on direct written premiums.