Allie Sanchez
Strong fundamentals are underpinning a stable outlook for the Canadian property and casualty insurance market, according to ratings firm Moody’s.
The company said in a statement that the “stable” outlook is supported by “good demand, strong underwriting discipline and solid balance sheets.” However, these trends are expected to be offset by persistently low investment yields and potential volatility from natural catastrophes.
Further, Moody’s said that the industry is expected to sustain consolidation trends as evidenced by Aviva Canada’s acquisition of RBC General in 2016, among others.
The industry premiums share of the country’s three largest insurers has also jumped to 36% currently from 30% five years ago.
“As consolidation continues, industry leaders will benefit from stronger pricing power and the advantages of scale in both distribution and claims. There will also be a shift away from using brokers to sell insurance toward direct and agency models,” Moody’s analyst Jason Mercer said in the statement.
Moody’s also noted that larger groups are in a better position to cope with pressures from the low interest environment that is hindering investment returns.
