The Canadian home insurance industry has traditionally stood as a pillar of stability, providing security and protection for policyholders impacted by unexpected disasters.

However, like many industries around the globe, it is not immune to challenges and risks.

In this blog post, we’ll highlight four significant insurance industry risks and how to mitigate these emerging risks in the coming years to ensure the industry continues being a reliable and trusted resource for policyholders across Canada.

Potential Recession

Potential recessions constantly threaten Canadian industries, and the insurance sector is no exception. The following are various ways a recession would impact both adjusters and policyholders.

Delayed Home Maintenance

In the face of a recession, policyholders may defer maintenance due to tight budgets. When homes aren’t properly maintained, issues like leaks and structural issues may arise, resulting in more claims.

Increased Competition

If a recession hits, policyholders may no longer be able to afford their premiums, forcing them to turn to competitors for more affordable solutions. This competition could potentially hurt the insurance economy as companies would be competing for the lowest prices.

Although adjusters may not directly control premium increases, it’s more important than ever to continue showing care and understanding to displaced policyholders to keep retention high.

Staffing Reductions

During a recession, insurance businesses may be forced to let go of employees that support the overall business operation, like customer service representatives or marketing professionals.


Inflation has become a great concern for everyone across Canada. In July 2023, the annual inflation rate in Canada rose to 3.3%, following a 2.8% increase in June 2023. (Statistics Canada)

As the cost of living increases, the coverage provided by existing policies may no longer fully cover the expenses of the entire damages and ALE. The following are additional issues that may arise if inflation continues.

Increased Construction Costs

When a policyholder is displaced and requires home renovations, their claim costs can skyrocket, especially when construction costs are at an all-time high.

For example, according to Macro Trends, in August 2015, lumber prices were around $229 per thousand board feet. In August 2023, they averaged at $519 per thousand board feet.

Should inflation continue to rise, the cost to repair a home will increase, resulting in higher claim payouts.

Increased Home Prices

The average home price in June 2023 in Canada was $709,218, 7% higher year-over-year. (WOWA)

Additionally, the cost of building homes across 11 major Canadian cities has increased 1.8% in the first quarter of 2023, following a 1.1% growth in the previous quarter. (Statistics Canada)

With home prices increasing due to inflation, fewer Canadians will be able to purchase a home, resulting in fewer new home insurance policies.

Increased Premiums

Due to rising claim costs, insurance companies may need to increase premiums to ensure they can remain profitable. However, increased premiums can create a negative domino effect that will greatly impact adjusters and policyholders.

If premiums rise, policyholders may not be able to pay the increased amount, forcing them to downgrade their policy or look to other insurance companies for alternative options.

Increased Business Expenses

Not only can inflation impact the housing market, but it will also impact expenses for insurance businesses.

Inflation can cause business costs, like salaries, rent, and more, to increase, which could put additional pressure on insurance businesses.

Reduced Return on Investments

It’s no secret that insurance companies invest a portion of their funds to increase annual profitability. However, inflation can cause lower investment returns, which can greatly impact the projected profitability of a company.

If investment returns aren’t great enough to cover claim costs, premiums may rise to ensure the company’s profitability isn’t negatively affected.

Labour Shortages

According to the Government of Canada, for the first time in Canadian history, there are more people over the age of 65 than those under the age of 15. With an aging population exiting the workforce, labour shortages are becoming a more prevalent issue. The following issues may occur should labour shortages become a more serious risk.

Increased Adjuster Workload

Labour shortages pose a significant risk to the insurance industry, as a lack of workers can put more work on adjusters’ plates, which can cause copious amounts of stress and mental health issues.

Delayed Claims Processing

If adjusters have a greater workload, they will be less likely to process claims in a timely manner, which can greatly reduce policyholder satisfaction.

Decreased Brand Reputation

If adjusters cannot provide top-quality service to policyholders due to being overworked and burnt out, policyholders may revolt and search for another insurance company.

Should enough policyholders receive sub-par service, even if it’s not directly the adjuster’s fault, the insurance company could gain a poor reputation which may prevent new policyholders from working with the company.

Climate Change

The annual costs of natural disasters in Canada have increased by $400 million from just ten years ago. (Natural Resources Canada)

As climate change becomes a larger issue, more severe weather events can lead to a surge in claims, forcing adjusters to manage multiple complicated claims simultaneously. Increased complex claims can also add more work to an adjuster’s plate, impacting their mental health.

Additionally, if natural disasters continue to increase, it may call for a premium increase to ensure policyholders are adequately protected from natural disasters.

Mitigate Risk With ALE Management Services

As the insurance industry evolves and the outlined risks become more prevalent, adjusters must be equipped with tools that help them better manage claims and keep policyholder sentiment high.

One of the best tools adjusters can take advantage of is Accomsure’s ALE management support.

Accomsure is an ALE management company that specializes in helping displaced policyholders find temporary accommodations that fit within their budget and meet their unique needs.

By providing reliable and stress-free accommodation options for displaced policyholders, Accomsure allows adjusters to focus on managing claims, enhancing efficiency and increasing policyholder satisfaction and retention.

To learn more about how Accomsure can help you mitigate insurance industry risks, contact us by phone at 1-888-212-5815, by email at [email protected], or by filling out our online form.