20 Apr 2020
Posted in Insurance
Impact of COVID-19 to significantly slow growth in Canadian insurance market
Canada’s high-quality universal healthcare system is set to limit exposure of private insurers in COVID-19 treatment but the non-life sector will struggle. Private health insurers largely foot the bill for prescription drugs, ambulance services and other related costs not covered by the public system. Therefore, GlobalData, a leading data and analytics company, expects non-life insurers to be adversely impacted, even though life and pension providers will record a rise in death benefit claims.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “Transport and hospitality are expected to be the most affected sectors – these sectors are worth CAD102bn and employ 1.8 million people. The industry was among the first sector to suffer due to a sharp decline in travellers from China. China accounts for the second-largest market for Canada-bound tourists. With border-control measures, Canada has reduced its commercial transportation activity to an estimated 75%.”
GlobalData has revised its forecasts for the total Canadian insurance industry to reflect the reduced growth expected post-COVID-19. The updated forecasts see the industry growing at a CAGR of 1.7% between 2020-24, down from 4.1% before the pandemic.
Mitra concluded: “One long-term effect is expected to be increased digitalization in the purchasing process. The pandemic has entailed a greater degree of adoption of digitalization by brokers, agents and insurers to ensure remote connectivity with customers. This is likely to continue due to behaviours learned by customers and its potential for cost-saving by the insurers.”