Canadian Underwriter
News

Canadian P&C consolidation will leave only “a few tables left”: broker


June 25, 2018   by Greg Meckbach


Print this page

Look for consolidation to continue within the Canadian property and casualty insurance industry, senior industry executives predicted at a recent conference.

Also, expect insurers to take on a greater role in distributing the products.

Speaking about consolidation, Adam Mitchell, the principal of Whitby, Ont.-based Mitchell & Whale Insurance Brokers Ltd., likened the P&C industry right now to a “giant poker tournament with thousands of tables.”

In the future, the P&C industry “won’t be as fractured of a marketplace as it is today,” Mitchell predicted at the Property and Casualty Underwriters Club (PCUC) luncheon held June 13 in Toronto. Returning to his poker tournament analogy, Mitchell warned there will only be “a few tables left” after more industry consolidation.

His comments come three years after Sylvie Paquette, then general manager of P&C for Desjardins Group, predicted that eventually only two or three personal and small commercial P&C carriers will “dominate” the industry in Canada. Paquette, the keynote speaker at the CIP Society Symposium in April 2015, predicted that Canada’s future P&C industry will look like the life insurance industry, which is currently dominated by Manulife Financial Corp., Sun Life Financial Inc. and Great-West Lifeco Inc.

Currently Canada’s largest player in the Canadian market, Intact Financial Corp., has less than 20% market share. Intact’s president of Canadian operations, Louis Gagnon, spoke at the PCUC Luncheon’s CEO panel, moderated by Marilyn Horrick, former national vice president at The Guarantee Company of North America.

Gagnon said there is potential for “disruption” in the insurance industry, similar to how Uber has disrupted the taxicab industry, because there is money to be made.“It’s known that distribution in financial services is definitely a place where there is good profit being made,” he said. “So if you make profit, there is a chance that you are going to be disrupted.”

After more consolidation, Mitchell said, “the brokers that will be left and the companies that will be left… those ones will be making a lot of money.”

Urs Uhlmann, CEO and country manager for XL Catlin’s Canadian branch, also appeared as a panelist. He suggested that 20 years ago the “distribution of roles” within the industry – distribution, underwriting, operations and providing capital – “was much clearer than it is today.”

Today, Uhlmann said, “you see insurers going further out on the distribution side than they used to do, and clearly you see brokers going further back in the value chain.”

Brokers can get underwriting authority if they are also coverholders in the Lloyd’s market.

Some insurers are interested in buying managing general agents in order to increase their premium, Gary Hirst, president and CEO of CHES Special Risk, told Canadian Underwriter earlier.

Recent acquisitions in the P&C market include:

  • Aviva Canada’s 2016 acquisition of RBC Insurance, the Royal Bank of Canada’s home and auto insurance carrier
  • Desjardins Group’s 2014 acquisition of State Farm’s Canadian operations
  • Travelers Companies Inc.’s 2013 acquisition of The Dominion of Canada General Insurance
  • Intact Financial Corp., (formerly known as ING Insurance)’s acquisition of both AXA’s Canadian operations and Jevco Insurance
  • Toronto-based Fairfax Financial Holdings Ltd.’s acquisition of Allied World in 2017.

Print this page

Related


1 Comment » for Canadian P&C consolidation will leave only “a few tables left”: broker
  1. Very interesting article. They talk of maybe 3 personal lines markets in the future . I cannot see that happening. In my day there used to be the “anti combines act” Not sure what they call it today but it is still there in some form. This will prevent limiting competition and will not allow too much concentration of market by insurance companies. I know Aviva and Intact are getting pretty close to large enough markets shares that might alert OSFI . I think it would be important for IBAC to bring this fact to the attention of the federal MP’s.

Have your say:

Your email address will not be published. Required fields are marked *

*