Canada’s insurance sector isn’t struggling from weak fundamentals; it risks being choked by regulatory overload if current trends continue. That was the message from Celyeste Power (pictured), president and CEO of the Insurance Bureau of Canada, who warns that a patchwork of oversight is stifling innovation, deterring investment, and undercutting national competitiveness.
“Over the past number of years, more and more of our capital has had to go to regulatory compliance,” Power said. “Am I going to put it towards more compliance? More supervisory work with my regulators? Am I putting it towards innovation, consumer technologies?”
Canada has 44 financial services regulators, with 19 focused solely on property and casualty insurance. Include national associations like the Canadian Council of Insurance Regulators, and that number rises to 20. For a country of Canada’s size, Power argued, this represents an unsustainable burden.
“And with that, we’ve seen an expansion in mandates, particularly around non-financial risks and overseeing with an emphasis on market stability,” she said.
While well-intentioned, that expansion has slowed the sector’s pace of growth. Citing analysis from a Statistics Canada economist, Power noted that regulatory requirements grew by 2.1% per year from 2006 to 2021 (2.8% for financial services sector), reducing GDP growth over that time period by an estimated 1.7 percentage points. “Canada does not only have a productivity problem. Canada has a regulatory problem,” she said.
She emphasized that the issue isn’t regulation itself, but the lack of strategic alignment. “In markets that are doing well, regulators are balancing oversight with mandates around competitiveness and growth,” Power said. “When you're combining those two things together... you actually have a regulator who’s going to look at that push and pull.”
Without national coordination, inefficiencies are multiplying. Power pointed to a recent instance where five or six provincial regulators each launched separate reviews into distribution. “Each of them were defining ‘managing general agent’ a little bit differently,” she said. At the same time, national bodies added yet another survey. “Coordination, harmonization, communication would go a long way.”
The consequence of regulatory sprawl is not just bureaucratic, it’s financial. “If you’re a Canadian business and you want to expand... you're hiring a team of lawyers, internal and external, to really understand how to grow and hit all the different regulatory and compliance measures,” she said.
New entrants, in particular, face steep barriers. “It takes years, many, many years, to get in,” Power said. “And while you're here, you're looking at the capital requirements and the regulatory requirements and all of the political differences across the country.”
That complexity raises fundamental questions for investors. “You're going to question, as a business owner, is it worth it?” she said. “A lot of people right now are saying, no.”
One result: fewer new competitors. “We're not seeing new market entrants,” Power said. “We're not seeing that competitiveness coming into Canada.”
The costs of inefficiency show up in crisis response. With climate-related catastrophes on the rise, insurers must be able to mobilize resources quickly across provinces. Today, they can’t.
“In the span of five weeks last summer, we had four significant weather events,” Power said, listing wildfires, hailstorms, and floods in Alberta, Ontario, and Quebec. “We need to be able to move adjusters from one province to the other so that we can get to our customer as quickly as possible.”
That remains challenging. “If an adjuster is licensed in Alberta, I think that they can do their work in Ontario in a very fair way,” she said. Yet, harmonization around licensing, despite clear benefits to consumers, has not been achieved.
Power said Canada’s regulatory system has become too focused on risk avoidance at the expense of economic agility. “We really do have to look in the mirror,” she said. “How can we create a system that’s going to make sense for us?”
Her proposed solution is structural: embed market competitiveness and growth into regulator mandates. “If we add in that market dynamism and competitiveness to regulatory mandates and agendas, I think it will force those conversations to look at that balanced approach,” she said.
Without change, Power warned, insurers will be less likely to scale or expand into new regions, leaving consumers with fewer choices. “If you're a business owner in Ontario running an insurance company, you want to go run an insurance company in BC and Alberta,” she said. “And give customers more choice.”
She stressed that this isn’t about blaming individual regulators or governments. “These are decisions that have been made for decades,” Power said. “Now it’s incumbent on all of us… to come together to look: does it make sense the way it’s set up right now?”
