IBC’s Power: Tariffs a concern but also a potential 'silver lining' for Canada

By Chris Munro

April 7 - (The Insurer) - The Trump administration’s new global tariffs will cause insurance claims costs to rise in Canada, but there is also a possible “silver lining” for the market to demonstrate its stability to consumers in the face of economic turmoil and for regulatory improvements.

That is the view of the Insurance Bureau of Canada’s president and CEO Celyeste Power, who said “of course there’ll be an impact of tariffs” on claims costs in Canada.

A report commissioned by the IBC forecast that “broad-based tariffs” would result in an 11% increase in auto claims costs, and a rise of 3.5% in the construction and personal property markets, Power said last week at Swiss Re’s 39th annual Canadian Insurance Outlook Breakfast in Toronto.

“Of course, this is all dependent on how the supply chains work and what decisions companies will make,” she added.

With the tariffs being imposed, Power said inflation is likely to rise, and with that insurance affordability “is going to be a very sensitive issue” for Canadians.

“That brings me some worry on behalf of our industry,” Power stated.

Insurers have already been pushing up pricing in the wake of the record-breaking catastrophe losses that Canada suffered last year – north of C$9 billion ($6.3 billion) as per CatIQ.

Combined with the impact of inflation on wages, parts and supplies, the tariffs will only exacerbate insurance affordability issues, Power suggested.

Despite the worries about the impact of the tariffs, Power said she has tried to find a silver lining.

“This is a real opportunity for our industry to demonstrate the financial stability that we provide to Canadians on their worst case.

“And everyone is worried right now and everyone's talking recession, inflation – these are very scary words to people. We are an industry that we can say through the good and the bad, through hard economic times, through very, very bad events, we have been there for our customers.

“And we will continue to be here for our customers. We are a shock absorber, and so that's an opportunity for us to show that strength, to show that stability.”

The current economic challenges also present an opportunity for Canada to consider what the country is doing well in terms of regulation, tax competitiveness and productivity when compared with other nations, and what can be improved upon.

“We could certainly be making improvements on regulatory competitiveness,” Power stated.

“We have an opportunity here to get that information and those recommendations that we have into government on regulatory competitiveness (and) tax competitiveness,” she said.

“We have ideas on how to make Canada a more productive country, but the pendulum we've seen swing from a regulatory perspective over the past five years, that's not going to get us there.

“We really need to take a step back and think, ‘Is this what's going to make us the most competitive country? Is this what our financial services sector needs?’”

Power expressed surprise that there are as many as 44 financial services regulators in Canada.

“We can do better, and this is an opportunity for our industry, our regulators and our policymakers to plan our path forward.”

Power also expressed concern at the lack of moves made by government to improve resilience.

“What we see in a lot of places is, instead of building up our resiliency and adapting to our changing climate and making our communities more protected, governments are more often trying to regulate their way out of the problem,” said Power.

“And as we saw in California, there's no regulating away having climate risk. We need to adapt. We need to be resilient.”