The aging population will limit growth prospects for Canada’s life insurance industry, according to The Conference Board of Canada’s first outlook for the insurance industry released March 6.
“Canadian insurance providers are facing a number of headwinds,” says Michael Burt, Director, Industrial Trends, The Conference Board of Canada. “Canadian life insurance companies face challenges associated with an aging population, including an increase in death benefit claims and shrinking premium collections.”
Property and casualty insurance
The report also forecasts limited growth prospects for Canada’s property and casualty insurance industry. “Discretionary spending on items that require insurance, such as recreational vehicles and vacation properties, is expected to slow amid rising household debt, and weak employment and wage increases,” says Burt.
The outlook report forecasts that overall Canada’s insurance industry in Canada is expected to grow by 1.3 per cent annually through 2021.
Technology will lower demand for agents
Technology is also reshaping the Canadian insurance industry, says the report. Better risk assessment and pricing models will be made possible with big data and improved software. Also, with the automation of tasks such as claims processing and the calculation of simple risks, there will be less of a demand for agents, lowering costs for the industry.
Technological change has also increased competition, with the emergence of new insurtechs. “This should keep price growth below inflation and limit industry profitability,” says the report.
Published two times per year
The Conference Board intends to publish its insurance industry outlook twice each year, which will be accessible via the organization’s e-Library. Read more of the first report here.