Skip to main content
Open this photo in gallery:

Hard markets present challenges – and opportunities – for insurance customers.Getty Images

Definity’s customer-centric approach shines as premiums rise amid inflation and climate related losses.

As catastrophic events strike with increasing frequency and related costs continue to soar, Canadians are grappling with rising insurance premiums.

Insurance claims costs for the past decade have been propelled by unprecedented wildfire seasons, historic floods and upward inflation – firmly entrenching a hard market cycle.

For insurers, a hard market means increased loss costs, declining reinsurance supply, and higher premiums for coverage. For customers, it means rates can be significantly steeper, with fewer options to choose from. Some argue these conditions have been present in Canada since 2018.

Fabian Richenberger, executive vice-president of commercial insurance and insurance operations at Definity Financial Corporation (DFY-T), one of Canada’s largest insurers, says rising premiums are happening across the country. “If you look at the Canadian experience, the seven largest catastrophic events [ever] took place in the past 10 years. This gives you a magnitude of the impact.”

Other hard market factors, such as inflation, have increased dramatically over the past three years, Mr. Richenberger notes. With inflation comes rising material and labour costs, and increasing charges related to repairing cars or replacing buildings.

Auto theft is another lesser-known hard market contributor, says Mr. Richenberger, fed by the thriving used car market. Recent estimates from Équité Association, a not-for-profit that aids in insurance crime and fraud investigations, suggest the insurance industry nationally lost more than $1-billion in vehicle-theft claims in 2022, up from $700-million in 2021. Equité expects these losses to continue climbing.

For insurance customers, rising premiums in a hard market can be intimidating, but Mr. Richenberger says there are ample opportunities to mitigate risk and mitigating rate increases. Commercial customers can participate in risk assessments, where they can understand and identify areas where they can reduce or manage unnecessary exposures to losses.

Risk assessments are essential for commercial customers to understand what risk management tools will be most effective for their organization’s specific situation, guiding customers towards solutions such as fire protection sprinklers, water leakage detectors, employee training and development of specific risk management strategies, or post-incident analysis programs. “Those that take risk mitigation seriously get a better premium than those that are slower to adapt,” Mr. Richenberger says.

Open this photo in gallery:

Fabian Richenberger, Definity's executive vice-president of commercial insurance and insurance operations, suggests insurance customers take a hard look at their risk amid hard markets.Supplied

Companies should also assess their appetite for risk to determine appropriate deductibles. A higher deductible means a lower premium, and for many businesses, this could be an effective tool in balancing out rate increases. “In the current market, companies looking to offset cost can increase their deductible – if you believe in the quality of your risk management programs this is an effective way to reduce premiums,” Mr. Richenberger says. “Also, be proactive and begin renewal conversations with your broker early.”

While hard market cycles can be challenging, Mr. Richenberger adds, they also allow insurers and their customers to focus on risk management, ultimately reducing losses over time. “We have the opportunity to help each customer with the support of our broker partners to become best-in-class in terms of prevention and risk mitigation.”

Mr. Richenberger says he expects hard market conditions to persist as catastrophic events continue to become more volatile and costly. As of June, 2023, the number of wildfires in Canada this year surpassed 2,214. Catastrophic events like these hold personal significance for Definity, a Canadian owned and operated company. “These are not distant occurrences,” he says, “but events that affect all of us as they are happening in communities we serve and live in.”

Amid these challenges, Definity reiterates its unwavering dedication to customer well-being and community support. “Our commitment is not just to our customers,” he says, “but to our Canadian home market. We are here for the long haul.”

“At the end of the day, we are in the business of taking care of our customers when they have a claim and this is a responsibility we all take very seriously.”

Mr. Richenberger adds this is especially true of Definity’s catastrophic events team, whose members fly across the country at a moment’s notice to support customers affected by natural disasters.

“The most meaningful part of our job is to do what we promise to our customers when they sign up with us. We want to provide a better insurance experience and we can count on thousands of motivated and engaged employees to just do that.”


Advertising feature produced by Globe Content Studio with Definity. The Globe’s editorial department was not involved.

Interact with The Globe