July 11, 2020 by Canadian Underwriter Staff
Since the insurance industry in P.E.I. tends to mirror the insurance markets in New Brunswick and Nova Scotia, it’s no surprise that Canada’s smallest province is also experiencing a hard commercial market.
“One of the biggest things is capacity,” says David Cooke, president of the Insurance Brokers Association of Prince Edward Island. “Insurance companies aren’t willing to put up as much as before. And that’s a big issue for seafood processors and agriculture.”
The island has more seafood processing plants per capita than the other Maritime provinces, and unfortunately, the frequency of fires at those buildings has affected the adjacent aquaculture industry.
“They have a lot more electrical fires and the buildings aren’t sprinklered,” says Cooke. “The rates are unfortunate for the oyster and mussel aquaculture guys because the insurance companies have them in the same class as the seafood processors.” Plus, aquaculture businesses are “even more hammered now because restaurants are closed [due to the COVID-19 pandemic].”
The seafood processing plants are also seeing rising rates, and it’s getting harder to secure coverage. “Let’s say the building was $1 million. Now [insurers] might only be willing to put up $200,000. You have to find a lot more insurance companies to fill that $800,000. And that can be a pain when there were already a limited number of guys doing it.”
For insurers, claims costs escalate when seafood processors are paid for a claim, but then the business owners “rebuild the same building without a sprinkler and it happens again,” says Cooke. “It’s like how they had those wildfires in Fort McMurray, Alta. What do they do? Rebuild the homes in the exact same area.”