an economic impact and future growth study of Ontario’s ...

1 For more information visit economic impact and future growth study of ontario s high-value insurance sectoran ecommcieptieptcdfurcg ttcurwhcsmyc pOga p huc-eadurcOeav lu can ech ucoc wetieptcdfurcpae curwhcsmyc pOga p huc-eadurcOeav lu can ech ucoc wet is document is a summary of two reports prepared for the Insurance Bureau of Canada. e rst was prepared by the Conference Board of Canada and is entitled Assessing the impact of ontario s P&C Insurance Industry: An economic footprint analysis (2011). In this report, the Conference Board has developed a broad economic impact assessment of the property and casualty insurance industry in ontario including direct and indirect employment, gross domestic product, direct and indirect tax bene ts to government and other impacts of the industry on the provincial economy.

2 E second report, prepared by Jupia Consultants Inc., is entitled ontario 's P&C Insurance Industry: Strengthening e Cluster (2011), and includes an assessment of the size and scope of the industry, its regional impacts across ontario and its potential for future growth . e report also highlights some of the challenges facing the industry moving for:Prepared by:Report Partner:JULY 2011 ontario Insurance Industry: Summary Report1. Insurance Matters: A Critical Service for Residents and Businesses 12. An Important economic Engine for ontario 23. A National/International economic Footprint 44. Insurance Spending in ontario Stays in ontario 55. Providing economic Benefit to All Regions of ontario 66. Insurance Brokers: Local economic impact Across ontario 77.

3 An Industry Dominated by Small and Medium Sized Businesses 78. ontario : A Global Insurance Hub 89. Prospects for Further growth 1010. Top Challenges Facing the Industry 1111. Conclusion 11: Table of ContentsOntario Insurance Industry: Summary ReportInsurance plays a critical role in the ontario economy by assuming part of the financial risk inherent in running a business, driving a car, or owning or renting a home. The property and casualty (P&C) insurance industry touches the lives of just about every resident and business across ontario by providing insurance protection for most homes, motor vehicles and commercial enterprises. The business of insurance is to limit the risk of unexpected events. The P&C insurance industry, in addition to paying for losses, works to prevent them.

4 For decades, P&C insurers and the Insurance Bureau of Canada (IBC) have worked in partnership with communities and officials on road safety, fire prevention, anti-theft campaigns and many other projects. Most recently, the industry has encouraged governments nationwide to develop a comprehensive strategy to deal with the effects of the increasing number of severe weather events resulting from climate 2009, the property and casualty insurance industry paid out in ontario over $ billion in net claims for personal property, commercial property, auto, liability as well as other types of insurance Insurance Matters: a critical service for residents and businesses1did you know? ontario Insurance Industry: Summary ReportThe insurance industry in ontario is made up of over 6,000 business establishments employing more than 77,000 people.

5 Nearly 47,000 of these jobs are in the insurance carrier sector and over 30,000 are in the insurance agencies, brokerages and other insurance related activities sector. More than two out of every hundred people employed in the private sector in ontario works for the insurance industry. This is more employed Ontarians than in the real estate sector, the accommodation sector and the architectural, engineering and related services sector, to name a few. The insurance industry as a whole contributes more gross domestic product (GDP) to the ontario economy than the motor vehicle parts manufacturing sector, the entire agriculture, forestry, fishing and hunting sectors combined and the province s universities sector. Property & Casualty Insurance: economic FootprintIn 2009, the P&C insurance industry employed 22,000 people in ontario .

6 The Conference Board estimates that this created 41,000 additional jobs, bringing the total number of direct, indirect, and induced jobs created specifically by the P&C insurance industry to 63,000 total, the property & casualty insurance industry in ontario directly contributed $ billion to real gross domestic product (GDP) in 2009. The economic multiplier (GDP boost) for the industry is Including the direct, indirect and induced impacts, $ billion in real GDP can be attributed to the P&C insurance 2009, the P&C insurance industry in ontario generated $944 million in corporate income tax, nearly $ billion in personal income tax, and $852 million worth of indirect tax revenues for the federal and provincial governments. This estimate does not include an estimated $563 million in premium taxes paid by P&C insurers, nor does it include $142 million in health care levies and $ million in payroll and employee benefit taxes.

7 ontario S INSURANCE INDUSTRY: AT A GLANCEOVER 360 Business Establishments(THE MAJORITY OF THE INDUSTRY S HEAD OFFICES ARE LOCATED IN TORONTO)PROPERTY & CASUALTY INSURANCE:OVER 250 Business EstablishmentsLIFE & HEALTH INSURANCE: ontario is home to 63% of Canada s Reinsurance Business Establishments. ere are 43 FIRMS in this sector across : ere are OVER 5,300 Insurance Agencies, Brokerages and Related Businesses Establishments in BROKERAGES, AGENCIES & OTHER SERVICES:2 economic impact OF ontario S P&C INSURANCE INDUSTRY (2009)$ BILLION REAL GDP - DIRECT$ BILLION PERSONAL DISPOSABLE INCOME$ BILLION CORPORATE, PERSONAL AND INDIRECT TAXES*$ BILLION PERSONAL INCOME$ BILLION REAL GDP - TOTAL* includes over $700 million in premium taxes, health care levies and payroll taxes paid by P&C : Conference Board of An Important economic Engine for OntarioOntario Insurance Industry: Summary ReportTAXES GENERATED $ MILLION (2009) IN ontario PROPERTY AND CASUALTY INSURANCE INDUSTRY INCL.

8 DIRECT, INDIRECT & INDUCED IMPACTSW hile not captured in the Conference Board study , the insurance industry also provides at least $150 million in property tax revenue used to support municipal government across the The impact of the insurance industry goes well beyond direct employment and economic activity. Many jobs in the legal, construction, auto repair, and other sectors are indirectly linked to the sector. Indeed the sector is a necessary enabler of business and community activity of all kinds. The impact of this economic activity is felt across multiple sectors of the economy. For example, the insurance industry supported $448 million worth of retail sales spending in 2009 across ontario . The industry also supported $233 million worth of economic activity in the information and cultural industries segment of the provincial economy.

9 Another $751 million was spent in the community, business and personal services segment of the Statistics Canada data from the household spending survey, we can estimate how the personal income generated from the P&C insurance industry is spent in the economy. The industry generates some $452 million worth of food sales each year (including restaurants) and another $ billion on housing related expenses (mortgage payments, household operation and furnishings). The P&C insurance industry supports over one thousand housing starts each year across $610 million is spent on vehicles and their maintenance, public transportation and other related expenditures. Nearly a quarter of a billion dollars in recreation spending is induced by the economic activity of the P&C insurance : Conference Board and Insurance Bureau of average weekly earnings for the insurance industry in 2010 was $1,167 (including overtime) - an annualized salary of nearly $61,000 - the highest of the 10 provinces across Canada.

10 The insurance industry is in the top quartile for wages among major industry groups in ontario - 17 percent higher than manufacturing, 22 percent higher than banking and 18 percent higher than the education Estimated based on both personal and corporate property taxes you know? ontario Insurance Industry: Summary ReportONTARIO P&C INSURANCE FIRMS SERVING MARKETS OUTSIDE THE PROVINCE (% of total rms)INTERNATIONAL MARKETS 18%CANADA 79%The majority of ontario s P&C insurance firms are serving more than just the provincial market from their ontario operations. In the survey completed for this report, nearly 80 percent of P&C insurance firms indicated they provide products and/or services outside the ontario market. Five firms work in international markets from ontario .