Insurance Brokers and Agencies in Canada Industry Market Research Report Now Available from IBISWorld

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Increased competition from insurance carriers that hire their own sales forces or use online platforms has threatened industry participants; however, economic improvements for households and businesses over the next five years are expected to push demand and industry revenue up. For these reasons, industry research firm IBISWorld has added a report on the Insurance Brokers and Agencies industry to its growing industry report collection.

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Industry demand will rise alongside the aging population, despite external competition

The Insurance Brokers and Agencies industry has experienced slow, steady growth over the past five years. The property and casualty insurance market, which makes up the majority of the Canadian insurance market, has been going through a soft cycle, meaning premium pricing has remained low following the recession. “Revenue for this industry has been subdued because industry participants are paid commissions, which rise and fall depending on policy pricing, demand for insurance and the rate at which Canadians use this industry's services,” says IBISWorld industry analyst Eben Jose. In the five years to 2013, industry revenue is expected to increase at an annualized rate of 1.3% to $8.5 billion, including a 2.5% rise in 2013.

Over the past two years, growth in policy pricing has remained flat, despite two years of massive insurance losses due to weather-related disasters. Starting with the Slave Lake fires, which cost insurance carriers nearly $700.0 million in 2011, the property and casualty insurance market has been hit with several disasters, which forced insurers to focus on maintaining profit margins rather than growing revenue through premiums. “This stagnant growth, combined with increased competition from insurance carriers that hire their own sales forces or use online platforms, has backed industry participants into a corner,” adds Jose. “In response, many brokers and agents have focused on expanding their level of expertise and expanding their product line to include risk management and insurance consulting services.” The Insurance Brokers and Agencies industry is highly fragmented, with the top four firms expected to account for a small percentage of industry revenue in 2013. Compared with the United States, insurance carriers in Canada have far less leverage due to the size and distribution of the population. It is less efficient for carriers to launch widespread advertising campaigns to draw in customers, due to the high cost of covering such a large area. Additionally, brokers and agents have built strong relationships within their communities, which are not easily broken.

Personal property and casualty insurance has faced an uphill battle since 2009, when the national unemployment rate spiked to 8.3% and per capita disposable income decreased 0.4%. Such drops caused consumer spending to decrease, which dampened demand for many of this industry's discretionary insurance products. However, economic improvements for households and businesses over the next five years are expected to push demand and industry revenue up.

In the five years to 2018, IBISWorld forecasts that industry revenue will increase. Sales of life and health insurance products will grow as interest rates rise from historical lows and the aging Canadian population drives up demand for private health insurance. However, the industry will face considerable pricing pressure from competitors, such as online carriers, which will keep profit margins from fully recovering to prerecession levels. For more information, visit IBISWorld’s Insurance Brokers and Agencies in Canada industry report page.

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IBISWorld industry Report Key Topics

This industry includes individuals and businesses that primarily act as agents or brokers in selling annuities and insurance policies. Industry participants earn commission income, mostly as a percentage of the premium of insurance policies sold. They also earn some fee income for providing risk management consulting and other value-added services.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.ca or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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