Insurance protects people or businesses in the event of a loss, like damage from a vehicle accident, things being taken from the home, etc. Life insurance and non-life insurance are the two basic types of insurance. In contrast to non-life insurance, which includes auto, property and liability, and homeowner policies, life insurance provides a lump-sum payment to a designated beneficiary in the case of the policyholder's demise or terminal illness.

In Canada, the market for general insurance had gross written premiums totaling approx. US$55.30 billion. The market is anticipated to expand at a CAGR of above 5% between 2021 and 2025. Travel, marine, and aviation insurance category growth were significantly impacted in 2020 by restrictions on international commerce and travel. The Canadian general insurance sector did, however, see growth in 2021 because of significant government measures.

Over 40% of clients preferred buying residential buildings and content insurance (property insurance) directly from the insurer, while over 42% preferred doing the same for auto insurance, according to GlobalData's Banking and Payments study. Customers between the ages of 18 and 24 preferred direct insurers above all other channels by more than 60% for property insurance. All age groups ranked insurance brokers as the second most favored channel.

The top five businesses in Canada's general insurance industry have a combined market share of more than 35%. Seven domestic insurers with a combined market share of more than 40% were in the top 10. The Wawanesa Mutual Insurance Company, Aviva Insurance Company of Canada, Lloyd's Underwriters, and Co-operators General Insurance Company were the next-largest market participants after Intact Insurance Company. Over 90% of all general insurance businesses came from the property, vehicle, and liability insurance, with the remaining 10% coming from other lines of business.

The following significant conclusions for the insurance industry in Canada:

Casualty/Liability: Because the core market is solid, insurers can concentrate on profitable expansion. While this is happening, rate hikes for high-performing, non-US exposed risks are only in the single digits. High exposed classes are being challenged by the surplus market, which has an impact on renewals and the need for additional capacity. Pricing considerations include facultative reinsurance rates, capacity, and circumstances in addition to US lawsuit patterns and escalating loss costs.

Cyber: Canada's cyber market circumstances are still difficult. The main factors influencing price and terms in the region are controls and loss experience. Inadequate actuarial modeling from the beginning of the cyber market has resulted in historically low pricing. It was stated that better claims data is developing as more claims are paid out by insurers, and this is resulting in more accurate models reflecting greater prices.

Property: The Canadian real estate market is beginning to stabilize. However, there are still some rate pressure and capacity difficulties, particularly for complicated and/or natural disaster- exposed risks. Modest rate hikes are occurring for well-performing risks.

Industry PE

Even though the industry's PE ratio is trading below its three-year average of 33.9x, investors have the highest optimism for the Property and Casualty Insurance sector. Analysts anticipate a 2.0 percent annual profits reduction, which is less than the preceding year's gain of 36 percent annually. This might mean that investors think analysts are underestimating future growth or that they anticipate the Property and Casualty Insurance business to have the least profits decline relative to other sectors. The Insurance Brokers sector, which is trading below its 3-year average of 55.7x, is the one that investors are the most negative about.

The insurance sector has increased by 1.7% over the last week, led by Intact Financial's gain of 3.7%. Nevertheless, the sector's decline over the previous year was 3.9 percent. Earnings are expected to fall by 1.8 percent yearly over the next four years.