Accusations of broken borders. Threats of tariffs. Heightened political rhetoric. Canada’s relationship with its largest trading partner may be headed for a rough patch as the prospect of a trade dispute looms.
As noted by the Fraser Institute, this uncertainty is creating a growing imperative for Canadian policymakers to move swiftly to protect the Canadian economy from the potential impacts of protectionist policies. One step Canadian policymakers can take is to eliminate interprovincial barriers to trade, capital flows, and, labour mobility.
Specifically, should a Canadian-US trade dispute pose limitations on Canada’s ability to tap into American adjuster capacity, Canadian adjuster capacity will be tested like never before.
More severe and frequent weather events are straining industry capacity
Canada’s P&C industry is closing out its worst-ever year for catastrophic weather events, with total insured losses in 2024 over the $8 billion mark. For comparison, the average annual losses in Canada from 2011 to 2023 were $2.7 billion.
This past summer, in the span of 24 days, Canada experienced a series devastating catastrophes, which resulted in nearly a quarter of a million insurance claims – 50 percent more than the industry usually experiences in an entire year. All at once.
Figure 1: Insured Catastrophic Losses in Canada, by year.
That volume and intensity of insured losses tested (and continues to test) the industry’s claims and adjusting capacity.
Regulators were swift to act
Thankfully, provincial regulators took action in the wake of these events to facilitate greater movement of labour across the country. Many implemented temporary measures that allowed for the admission of out-of-province (and in some cases, out-of-country) adjusters into their provinces.
For example, in the wake of the Calgary hailstorm and Jasper Wildfire Complex, the Alberta Insurance Council was quick to approve expedited adjuster licensing of non-resident adjusters. Following the floods in Montreal and many other municipalities, the Autorité des marchés financiers (AMF) eased its rules and allowed insurers to use supernumeraries as claims adjusters, including those from other Canadian provinces and from the U.S. The AMF also upwardly revised the maximum value of claims that can be handled by unlicensed employees, from $7,500 to $30,000. Following the flood that impacted the GTA and other parts of southern Ontario, the Financial Services Regulatory Authority of Ontario (FSRA) implemented temporary measures that allowed insurers to use claims adjusters who have licences from outside the province.
Moving to a more permanent solution
While this year’s post-catastrophe allowances made by regulators were welcome, given the uncertainty facing the future of mobility, it is critical that we move swiftly to remove barriers to inter-provincial mobility.
That’s why a coalition of P&C insurance associations has been calling on Canada’s regulators to work together to establish a licensing reciprocity regime – meaning if an adjuster is licensed in one province, their license is recognized across the country. As it stands, every province has a different process for licensing adjusters. While each province’s requirements vary, the differences are oftentimes minor.
As the coalition has noted in previous communications with regulators, this fragmented approach to licensing is a disservice to consumers, who benefit from the expeditious processing of claims, particularly during severe weather events. There is simply no reasonable public policy rationale justifying this type of fragmented approach to licensing. Other countries have found a way around these barriers: for comparison, in the United States, all but three states offer reciprocity on adjuster licensing, with the exception of New York, California, and Hawaii.
Looking ahead
If this year is any indication, severe weather events are going to continue to occur, and potentially with greater frequency. A recent Leger poll found that one-third of all Canadians are feeling the direct impacts of extreme weather.
It is also of note that adjuster licensing reciprocity can only go so far to mitigate the impacts of worsening weather events. The ultimate solution to the claims pressures associated with these catastrophic events lies in creating a more resilient country – one that is better able to adapt to extreme weather events. These include investments in public infrastructure, land use planning that ensures homes are not built on flood plains and in high risk wildfire zones, and building codes that better protect homes and livelihoods. And of course, the long-awaited National Flood Insurance Program, alongside new flood hazard maps.
As we head into 2025, the P&C industry stands at the ready to work constructively with governments and regulators to remove barriers to labour mobility, improve the claims landscape, and ultimately make Canada a more resilient country.
