Where Canada ranks globally for insurance market premiums

Canada’s insurance market ranks eighth in the world by total premium volume, according to a new study from the Swiss Re Institute. 

Total premium volumes for Canada were US$171 billion, up 2.8% from US$166 billion in 2022. Canada’s global market share in 2023 was 2.4%, consistent with 2022. 

The Swiss Re Institute estimates the Canadian insurance market’s total premium pool will be US$176 billion this year and forecasts it to be US$185 billion in 2025. 

The United States and China remain the first and second largest insurance markets in the world, with total premiums of US$3.2 trillion and US$724 billion, respectively. 

Swiss Re’s annual World Insurance sigma report looked at both the property and casualty (non-life) and life insurance sectors. It found the global economy has remained remarkably resilient, setting the scene for growth and improved profitability across the insurance industry. 

“The insurance industry has reached a new equilibrium after the challenges of recent years,” Jérôme Haegeli, Swiss Re’s group chief economist said in a press release last week. “The global economy has surprised on the upside, which should drive more demand for insurance.  

“The life sector in particular is one to watch as higher interest rates drive investment income and consumer demand for annuities, giving more people secure retirement incomes.” 

 

P&C outlook 

On the P&C side, profitability for non-life insurance is expected to improve. Swiss Re Institute notes that due to inflation and the resulting rise in claims costs, non-life insurers have increased rates over recent years.  

The institute expects to see higher prices continuing for personal lines in 2024, moderating in 2025. 

For commercial lines, though still positive, rate increases have decelerated, with some markets starting to soften. In Canada, Applied Systems and Aon Canada recently found commercial insurance rate increases in the most commonly placed lines of business are trending downward. 

“We expect commercial P&C carriers to maintain profitability in 2024, as rate trends have enabled lines like property to stay sustainably priced,” says Kera McDonald, chief underwriting officer at Swiss Re Corporate Solutions, in the release. She adds commercial insurance accounts for nearly half of the total P&C market. 

“The industry has seen single-digit rate increases for property business written this year,” McDonald says. “On the casualty side, we observe a trend of general market softening across most long-tail lines.” 

P&C insurers are expected to improve profitability in 2024, with industry-wide return on equity (ROE) across eight major markets at 10% so far this year, up from 6% in 2023. ROE of above 10% is forecast into 2025.  

Canada’s P&C industry was well above the global average, with a 16.2% ROE in 2023 and an average ROE of 14.4% since 2020, the Property and Casualty Insurance Compensation Corporation reported earlier this year. 

Major economies are proving more resilient than expected, with global GDP growth forecast at 2.7% in real terms in 2024, the same as last year. This resilient growth is expected to continue into 2025 at 2.8% in real terms. 

The trend to global disinflation continues. “However, returning to target inflation levels is unlikely to be a smooth journey,” Swiss Re warns. 

 

Feature image by iStock.com/Elif Bayraktar