In the Canadian insurance industry, consumers now find themselves faced with fewer options.
Large conglomerates are increasingly buying out their smaller counterparts, leading to
significant challenges for consumers. Consolidation within the insurance market is gaining
momentum as organizations grow to counteract the growth of their competition. In this post,
we’ll review the damage this consolidation is having on the Canadian insurance marketplace
and what consumers can do to make an effective policy choice.

Traveler”s acquisition of Dominion of Canada and Intact”s acquisition of Axa are two of the more
noteworthy recent example of consolidation in the Canadian insurance industry. The rate at
which larger companies are buying out smaller regional insurance firms is increasing, and this is
set to impact consumers considerably.

Higher Premiums
With a limited amount of competition within the marketplace, larger Canadian insurance
companies are then free to charge higher premiums. They can raise their rates above market
levels and price many consumers out of the market. With the general Canadian population
already holding record levels of debt, the additional insurance costs could price many families
out of the marketplace.

Fewer Options
Another consideration when it comes to insurance company consolidation is the reduced
number of insurance products. Consumers will now have a more limited selection of insurance
policies from which to choose. This will mean that policies are no longer customized to the
particular individual as companies offer a smaller number of products that cater to the general

No Incentive for Innovation
Competition in any industry stimulates innovation. It causes business owners to be creative in
responding to a challenge to their position. Without competition in the insurance industry, the
market leaders have no need to innovate their products and services. They can begin to reduce
their services knowing that consumers have no other option than to choose their organization.
Without innovation, companies will offer the same products year-after-year, with little
improvement in the market for consumers.

Deterring Startups
Increased consolidation in the marketplace also deters startups from entering the insurance
industry. Potential business owners are unlikely to generate the startup capital required to
compete with growing conglomerates. This helps further limit the number of insurance
companies available to Canadian consumers.

Decreased competition within the Canadian insurance marketplace means more expensive
premiums and limited access to required insurance products for Canadians. To discover more
about the potential issues caused by industry consolidation, speak with our team today