Insurance costs have become a top concern for over two-thirds (68%) of Canadian small businesses, and half have experienced an increase of 10% or more in their insurance premiums over the last 12 months, according to a new Canadian Federation of Independent Business (CFIB) report.
“Commercial insurance provides a safety net for small businesses and protects them against financial losses, property damage or natural disasters. But it’s getting harder and costlier for small businesses to get coverage, at a time where they’re already grappling with many other cost increases,” said Jasmin Guenette, Vice-President of National Affairs at CFIB. “In certain provinces, businesses also have to pay a tax on all insurance products plus another tax on premiums. This can quickly add up and contribute to the financial burden small firms are facing.
“It’s concerning that small business owners are being charged an arm and a leg for something so vital to their operations. It’s up to the governments and the industry to make sure that insurance rates are affordable and there are a variety of options available to small businesses,”
Jasmin Guénette
The three most common types of insurance for small business – commercial property, commercial auto and general liability commercial insurance – are also the most expensive. For a typical small- and medium-sized business, a 10% increase in annual total insurance costs would equate to approximately $1,500 more in insurance premiums, said the CFIB.
Nearly half of business owners said they aren’t satisfied with the available insurance options. Most businesses (56%) said they stayed with their insurance provider when they had to renew because they could not find affordable alternatives that met their needs. More than six in 10 of surveyed businesses obtain their insurance from just three companies, it said.
Michelle Auger
“While most businesses are content with the customer service they receive and how responsive their insurance provider was, there’s still lots of room for improvement. For example, small businesses want a better process of obtaining or renewing their insurance,” said Michelle Auger, CFIB’s senior policy analyst and report co-author.
The CFIB is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region.
CFIB has several recommendations to governments on how to make insurance costs more affordable, including:
- Eliminating the Insurance Premium Tax (IPT) and Retail Sales Tax (RST) on all insurance products for small businesses.
- Ensuring provincial and federal regulators are working cohesively together to provide a consistent regulatory environment.
- Making sure there are no significant barriers to entry for new insurers to enter the Canadian market.
- Encouraging alternative insurance options, such as captive insurance or cooperatives, which could help increase competition in the market.
The insurance industry should also increase support for small business clients, offer more specialized tools and expertise, provide fairness and transparency around fees, and include a full chapter for small business- to the Insurance Code of Consumer Rights and Responsibilities, said the organization.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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