Insurance is big business, but some sectors have historically been bigger than others. Auto insurance has long boasted some of the highest profits and largest number of customers in the biz, but now the property insurance sector is catching up — fast.
In 2007, Canadian insurers charged customers $14.3 billion in auto insurance premiums, according to statistics from the Office of the Superintendent of Financial Institutions (OSFI). That’s compared to the $9.2 billion that insurers charged in property insurance premiums.
That means that 10 years ago, 61% of all premiums were for auto insurance, compared to 39% for property insurance.
The gap has since closed. In 2017, the ratio shifted to 53% for auto insurance (which charged customers $17.4 billion in premiums) to 46.9% for property insurance (which charged customers $15.4 billion).
What happened in the intervening years? There are several factors at play.
First and foremost, more people are getting property insurance, which encompasses both commercial property and home coverage.
“Property is growing much faster [than auto] as a line of business,” Joel Baker, president and CEO of MSA Research, told Canadian Underwriter recently.
Secondly, less people are looking to buy or even drive cars— especially in urban centres, where parking spaces are limited and public transit, as well as ridesharing resources like Uber and Lyft, become increasingly easy to access.
Baker believes this trend will continue. Auto insurance will make up a smaller proportion of the insurance market than it previously did, while other sectors like property/catastrophe and cyber insurance will grow in tandem with climate change and cybersecurity risks.
Federally regulated insurers charged customers $58 million in cyber liability premiums last year, compared to $21 million two years ago — a 176% increase in two years.