A new report from Insurance Bureau of Canada (IBC) recommends policies that governments can adopt to help stabilize commercial insurance premiums for businesses and reduce cost pressures within the commercial insurance market.
“Our report provides governments with a road map for enhancing the sustainability of the commercial insurance market,” said Liam McGuinty, Vice-President, Strategy, IBC. “Key recommendations focus on reducing tax burdens, adapting to climate change, reforming tort laws, tackling challenges in commercial trucking, and enhancing cybersecurity measures. These initiatives will contribute to a stronger commercial insurance ecosystem, better equipped to support Canadian businesses.”
In developing the report, Fuelling business prosperity – government’s role in fostering a sustainable commercial insurance market, IBC sought input from business organizations, including the Canadian Federation of Independent Business, to understand ongoing challenges and provide governments with policies and reforms that can lead to a healthier operating environment for businesses.
Taxes charged on top of commercial insurance policies emerged as one of the top concerns for Canada’s business organizations. The report finds that depending on the province or territory, insurance premium taxes and retail sales taxes can be up to 20% of the premium; this can result from an overlaying of taxes, otherwise known as “a tax on a tax.” The significant cost of taxes may deter businesses from securing adequate coverage. The report advocates for eliminating or reducing these taxes and postulates that such a move would encourage businesses to invest in comprehensive insurance and risk management plans to ensure resilience against unforeseen events.
“Commercial insurance plays a pivotal role by supporting the stability and expansion of businesses in all industries,” said McGuinty. “It provides businesses with the necessary safety nets to take risks, innovate, grow and meaningfully contribute to the economy. Government has a critical role to play in ensuring policy decisions support the continued vibrancy of the commercial insurance sector, and support the stability and growth of businesses.”
Additional Resources
The commercial insurance industry provides tremendous value to Canada’s economy, according to a recent report. Not only does it contribute nearly $15 billion to Canada’s GDP, it provides about 115,000 jobs and $8 billion in labour income.
A recent MNP report found that new commercial truck drivers who haven’t received adequate formal training are at higher risk of a collision, which is a safety hazard for everyone on the road.
As cyber threats continue to evolve, businesses – particularly small and medium-sized enterprises – will need more education on cyber security, resilience and how to qualify for cyber insurance.
