Executive Outlook 2021: Stéphane Lespérance, Aon

Stéphane Lespérance, President, Commercial Risk and Health Solutions in Canada, Aon

In 2019, and the early part of 2020, we talked about a market under correction with increased underwriting discipline by insurers. This year, we added to the mix a global pandemic, claims uncertainty around COVID-19, and the global economy’s uncertainty. It makes it a very challenging market, not only for brokers and insurers, but for Canadian businesses.

It’s too early to fully predict how the market will trend in 2021 but one fact remains: The return to profitability for insurers is top of mind. Markets are reducing significant capacity in certain classes of risk or simply exiting others. Property, D&O and professional indemnity are three challenging classes and we don’t expect that to change in 2021.

So far this year, the Canadian industry operates profitably relative to its peers with a 98.3% cumulative net combined ratio. Despite this, capacity remains tight and the insurance market overall continues to harden as corrections implemented so far have not produced the expected level of impact.

The underwriting process is more detailed, with an abundance of questions related to COVID-19 response. As COVID-19 restrictions eventually subside, and as businesses return to some semblance of normalcy, market conditions are expected to become more stable, with pricing and conservatism more similar to the prior two years.

In many instances, underwriting authority has been pulled away from Canadian underwriters.

This situation is putting more strain on Canadian insurers to be supportive of Canadian businesses. Construction, food, transportation, forestry and pulp and paper industries have been key pillars of our economy for decades. They are even more important now and we need to support them with innovative solutions.

How are we solving client issues?

We are talking to our clients with one voice. Our approach is broader than just offering a solution within a single solution line. We bring to the table a number of solutions. Our globalization of resources allows us to bring forward the right individuals and capacity that will create unique solutions for our clients.