Prospects for overall growth in the P&C industry

The Canadian property and casualty insurance industry does not operate in a vacuum. It is part of the Canadian economy. It is hard to imagine the p&c industry enjoying robust growth unless it goes hand-in-hand with a significant expansion of our national economy. And if we want to get a sense of where the Canadian economy is headed, it is instructive to look at what is happening south of the border. Although there has been much talk about diversifying our international trade, the fact is that the United States still accounts for roughly 80% of our exports.

At Sochi, our victory in women’s hockey came at the expense of the Americans. As a practical matter, a significant turnaround in our economy is unlikely to occur until there has been a corresponding turnaround in the fortunes of our largest trading partner.

While the economic news in the U.S. is not as bad as it has been, it is still not good. As reported by Bloomberg, growth in American gross domestic product (GDP) is being held back by smaller gains in consumer spending, inventories and exports. In looking ahead to the rest of the year, a senior economist at RBC Capital Markets LLC in New York remarks that it is more about a reduction in headwinds rather than any type of fundamental improvement.

At the same time, the CEO of Gallup has expressed his own doubts about whether the U.S. economy is experiencing a sustainable recovery. Jim Clifton points to the fact that the number of business closures continues to outstrip the number of new business startups. He also points to the continuing problems of high unemployment and weak expansion of GDP.

Certainly things have improved since the financial crisis of 2008. Still, we are not yet at the point of full recovery on either side of the border. Until the economy in both countries is back on a sound footing, a meaningful expansion of the property and casualty industry is unlikely to occur.

When the women’s hockey final was being played, I was rooting for Team Canada. When it comes to the economy, I am rooting for Canada. I am also rooting for the U.S.