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As pandemic rages, insurance premiums soar for business

A couple months ago, Tony Siwicki thought everything was fine. Then he got a call from his insurance company.

“It was about my business coverage,” said the owner of Silver Heights Restaurant, a family-run institution that’s been in business in Winnipeg since 1957. “It wasn’t good news. In fact, it made everything worse for us during this pandemic.”

Siwicki’s restaurant has been slapped with around a 25 per cent hike on insurance costs. But as new data from the Canadian Federation of Independent Business reveals, his St. James eatery is not the only one.

Premiums rising

More than half of all Canadian businesses have seen their insurance premiums increase over the past 12 months, suggest figures from CFIB, shared exclusively with the Free Press ahead of a wide release next week.

And one-sixth say they’ve seen hikes like Siwicki’s, of up to 25 per cent or more, within the last year.

That could mean around $8,000 more in premium payments per business on an annual basis.

On top of that, nearly one in 10 firms say they are now having trouble finding an insurer to begin with. Those numbers affect businesses in the hospitality, transportation and agriculture sector far more than any other industry — with hikes rising by several percentage points for most companies.

Could drive more debt, unemployment

It’s a problem amid rising COVID-19 restrictions in parts of the country, especially in Manitoba, that’s got business stakeholders split on the exact reasons for why it’s happening. But experts believe, should things remain unchanged, it will likely create more debt and unemployment within sectors that are already struggling to survive.

“There’s no question that this is a concern — it affects everything, from having to cut costs on employee payments to making sure they can pay bills to keep their place running,” said Chuck Davidson, CEO and president of the Manitoba Chambers of Commerce.

“I’ve certainly heard it from our members and especially in some rural areas that aren’t able to get coverage at all.”

Hikes across the country

Across the country, insurance woes appear stark. In Manitoba, at least one-third of businesses surveyed saw an increase in their costs, with more than 17 per cent saying they’ve experienced significant hikes.

Those numbers are among the highest in Canada — just behind other provinces that saw significant increases like Quebec (at 17.6 per cent), Alberta (18.2 per cent) and the highest increase seen in New Brunswick at 24.3 per cent.

Other regions like Ontario (14.3 per cent), Nova Scotia (14.8 per cent) and British Columbia (at 16.7 per cent) were middle of the pack in terms of insurance hikes, up by a quarter or more of their original costs, with Prince Edward Island at the lowest end of the spectrum (at 4.8 per cent).

“In our experience, up to 35 per cent or more restaurants are actually experiencing this here,” said Shaun Jeffrey, executive director of the Manitoba Restaurant and Foodservices Association.

“It’s just another kick in the gut when nothing is going their way already. It could be what causes them to lose everything on the line.”

Last week, the MRFA released data showing 79 per cent of business owners were at least $20,000 in arrears, and around one-third of that had outstanding debts of up to $80,000.

Insurance mandatory

Corinne Pohlmann, CFIB’s vice-president of national affairs, says it’s especially a problem because businesses can’t legally operate without insurance. It’s also why she’s suggesting the province step up to provide liability immunity for businesses to prevent further losses.

“It would be in everyone’s interest, business owners and insurance providers, to maintain those relationships and work together rather than shutting out a large sector of the economy from this essential service,” said Pohlmann.

Reason for increases

Two insurance brokers — one from Winnipeg and another from Ottawa — spoke to the Free Press on condition of anonymity to explain circumstances that could have led to such hikes during the pandemic.

“Frankly,” said one, “most of it’s about the risk factors in partnering up with an independent business in 2020. They just aren’t practical investments when you have the coronavirus on your hands.”

The other said it “might not even be COVID-related, it could just be that they are being realistic about where they can see payments coming from.” She added that restaurants — no matter how long they have been in business — are “problematic places to offer services to.”

But while insurance fees increase, at least 40 per cent businesses polled by CFIB said their risk of liability has also increased during the pandemic.

For Siwicki, that means it couldn’t be more important to have insurance.

“We need money right now, but no one will lend us anything if we don’t have insurance,” he said in an interview Friday.

To qualify for provincial or federal COVID-19 assistance and relief programs, having viable insurance is mandatory.

“It’s a horrible position to be in right now as a business owner,” said Siwicki. “The least they could do is help us in our time of need — it’s as if we haven’t been paying these costs for all those years.”