2023 Outlook for Canada's Property and Casualty Insurers Seen Trending to PositiveInsurance Organizations
DBRS Morningstar released a commentary discussing our outlook for Canada’s property and casualty (P&C) insurers in 2023.
Key highlights include the following:
-- The credit rating trend for the majority of DBRS Morningstar-rated Canadian P&C insurers is Positive, in contrast to historically Stable trends.
-- Premium rate increases are expected to exceed headline inflation as a result of higher reinsurance costs, climate change, and the prevailing hard market cycle dynamics.
-- Higher interest rates in 2022 have led to large unrealized losses but insurers will benefit from higher interest income in 2023.
“We view P&C insurance demand as not very income-elastic, meaning that the demand should remain relatively steady, even as financial conditions deteriorate, as many types of insurance are mandatory or otherwise seen as a valuable precautionary spending decision,” said Nadja Dreff, Senior Vice President, Head of Canadian Insurance. “Additionally, consumers and corporate entities have become much more aware of the threat that the changing climate presents to their safety and financial security and are more inclined to purchase insurance than to realize immediate saving by forgoing the coverage.”