April, 2009

Insurance in Uncertain Times - An Update

In December 2008 we provided you with some of our thoughts about the then current insurance marketplace and how it might affect you as a consumer of insurance. Unfortunately our title is still appropriate as the world economy and our own local economy continue to deal with turbulent economic news.

On the Canadian insurance scene, 11 of the top 15 insurance companies have recently announced financial losses for 2008 due to deteriorating insurance results and uncertain investment markets. As we predicted in our December newsletter, this should result in the insurance market “hardening” which shows itself through increased insurance premiums. While in the first quarter of 2009 we have not seen any significant increases, we have witnessed premiums firming in all areas both in commercial and personal risks and we anticipate by the end of the second quarter insurance premiums will start to edge upwards.

What can we expect from insurers for the remainder of the year? The Canadian insurance industry remains in a strong financial position overall thanks in no small part to the strict government regulatory restrictions that they must work under. Despite this fact, given the financial results of the industry and the economic environment we are living in, our estimation would be that insurance premiums will need to increase. The extent of the increase and the exact timing is much more vague. As mentioned in our last newsletter, we continue to see new entrants in the insurance marketplace in certain classes of business. But, as we expected, this is starting to decrease and we anticipate seeing these insurers heading for the exits throughout the balance of this year and into 2010. Their model and market share was primarily built on a low price, which cannot be sustained in these times. Depending on the extent of the impending “hard” market, replacing these exiting insurers can sometimes pose a problem for brokers as capacity becomes an issue.

We realize price is an important element in all our business decisions, but we continue to stress the need for a quality product, advice and superior customer service. These factors have never been more important as we move into a changing marketplace. We continue to remain confident in the insurers we represent and our team is here and will be ready to help you navigate through these turbulent waters.

As your insurance broker, our job is to ensure your insurance program adequately protects your assets at a competitive premium. To properly perform our job on your behalf, we need to understand the type and use of your assets and be able to advise you in this regard. We are very proud of our professional team who are committed to their job through continuous training and skill enhancement. Our team has one of the highest percentages in Canada of people who have either received and are working towards professional insurance designations. Learning is one of MCT’s Core Values, and we fully support our team’s efforts. The benefit for you is that we can provide the advice you need to make informed business decisions on insurance matters. We also have team members with their Canadian Risk Management designation (CRM) on staff that have the knowledge, education and abilities to work with you in providing suggestions on risk management concepts which could save you time, money and aggravation. We would welcome the opportunity to provide this service to you in the future.

We appreciate our business relationship and would welcome any insurance question you may have. Please feel free to speak to your MCT representative, or myself directly. We are here for you.

Mike Brien - President & CEO

(902) 832-9340

mike.brien@mcti.ca