November 11, 2020 by Adam Malik
With commercial insurance premiums on the rise in a number of business classes, and some unable to even find an insurer, a national association representing Canadian small businesses is calling on insurers and provincial governments to do more to ensure its members can get affordable coverage amid the global COVID-19 pandemic.
“Businesses can’t legally operate without insurance, but many have been priced out or are unable to find an insurer willing to cover them,” Corinne Pohlmann, senior vice president of national affairs at the Canadian Federation of Independent Business (CFIB), said in a statement.
The group, which represents 110,000 small and medium-sized businesses, wants the insurance industry to “adopt a moratorium on cost increases and policy cancellations during the pandemic.” It wants provincial governments, meanwhile, to “provide liability immunity during the pandemic to all businesses performing services in accordance with applicable public health guidelines while acting in good faith.”
At issue is a supply and demand problem, Insurance Bureau of Canada spokesperson Celyeste Power told Canadian Underwriter in an interview. “Right now, there’s still as many people looking for insurance, maybe even more, but there are fewer people offering insurance in the market,” she said.
A recent survey shows that 40% of CFIB’s members say COVID-19 — which was declared by the World Health Organization to be a global pandemic on Mar. 11 — has increased their risk of general liability. The CFIB has been communicating the needs of its members to governments and the insurance industry throughout the pandemic, and will be presenting its latest survey finding to IBC’s National Commercial Insurance Task Force.
“It would be in everyone’s interest, business owners and insurance providers, to maintain those relationships and work together rather than shutting out a large sector of the economy from this essential service,” Pohlmann said. “We are pleased that the industry has tried to step up to find solutions but the situation remains dire for too many small businesses.”
Power believes solutions can be found by working together with all stakeholders. She pointed to a helpline and website that IBC has set up, in addition to a new risk manager role, intended to help commercial clients in all business sectors across the country.
“We think by working together, we can help small businesses during this challenging time,” Power said. “One rule, one undertaking, one regulation in Canada is not going to help the global problem, unfortunately.”
CFIB’s latest findings show that a quarter of businesses in the hospitality sector, 23% of transportation businesses, and 22% of agriculture businesses reported a premium hike of at least 25% over the past year.
Moreover, 14% of hospitality businesses and 12% of transportation organizations said they haven’t been able to find an insurer willing to provide coverage over the past year. Overall, 9% of all classes of businesses reported this.
CFIB and IBC have been working together to try to find solutions, Power noted. “And we’re working with a number of insurers around the table to come up with new and innovative solutions to help.”
She pointed to the fact that IBC members have provided more than $1 billion in personal and commercial insurance relief to those affected by the pandemic. The industry has deferred an additional $200 million in premiums for businesses.
“The insurance industry is willing to listen to small business owners’ concerns and are trying to provide solutions, with some providers proactively offering relief measures to their clients,” Pohlmann said.
The challenges facing commercial clients were not completely unexpected, but were exacerbated by the pandemic, Power observed. Canada’s commercial market had already been showing signs of hardening after about a decade of it being soft.
“We started seeing the effects of that global hardening market coming,” Power said. “Then pair that with COVID-19, a global pandemic, shutdowns, difficulties with the economy — it’s kind of created a bit of a perfect storm of factors that have gone to make a lot of challenges in the insurance market that are impacting customers.”
Feature image by iStock.com/FG Trade