Insurance costs increasingly unaffordable for Sask. small businesses
Insurance costs increasingly unaffordable for Sask. small businesses
CFIB calls for removal of the ‘double taxation’ on insurance premiums in Saskatchewan
Regina, December 11, 2024 – Insurance costs have become a top concern for 60 per cent of Saskatchewan small businesses. Nearly half (45%) have experienced an increase of 10% or more in their commercial property insurance premiums over the last 12 months, while another 33 per cent saw an increase between 3% to 9% according to a recent Canadian Federation of Independent Business (CFIB) survey.
“Commercial insurance provides a safety net for small businesses and protects them against financial losses, property damage or natural disasters. But it’s getting harder and costlier for small businesses to get coverage, at a time where they’re already grappling with many other cost increases,” said Brianna Solberg, CFIB provincial affairs director. “To make matters worse, Saskatchewan is the only Western province to ‘double tax’ commercial property insurance premiums. Saskatchewan’s 6% provincial sales tax is charged on top of its 4% insurance premium tax. These costs pile on and contribute to the financial burdens small firms are facing."
The three most common types of insurance for small business – commercial property, commercial auto and general liability commercial insurance - are also the most expensive. For a typical small- and medium-sized business, a 10% increase in annual total insurance costs would equate to approximately $1,500 more in insurance premiums. An alarming 40 per cent of Saskatchewan small businesses said that increased insurance costs have forced them to reduce investment in their business, while another 30 per cent reduced plans to expand their operations.
Nearly half (47%) of Saskatchewan business owners said they aren’t satisfied with the available insurance options. Most businesses said they stayed with their insurance provider when they had to renew because they could not find affordable alternatives that met their needs.
It is also concerning that small businesses are paying so much more for insurance, despite the fact that so few of them have actually filed claims. Nearly half (42%) of Saskatchewan small businesses said they have never filed an insurance claim, and 43 per cent said they have not filed a claim over the past 12 months.
“While most businesses are content with the customer service they receive and how responsive their insurance provider was, there’s still lots of room for improvement. For example, small businesses want more clarity from their policy statements, and a better process of obtaining or renewing their insurance,” said Solberg.
CFIB has several recommendations for the Saskatchewan government as to how to make insurance costs more affordable, including:
- Eliminating the Insurance Premium Tax (IPT) and/or the Provincial Sales Tax (PST) on all insurance products for small businesses.
- Ensuring provincial and federal regulators are working cohesively together to provide a consistent regulatory environment.
- Making sure there are no significant barriers to entry for new insurers to enter the market.
- Encouraging alternative insurance options, such as captive insurance or cooperatives, which could help increase competition in the market.
Both the public and private insurance industry should also increase support for small business clients, offer more specialized tools and expertise, provide fairness and transparency around fees, and include a full chapter for small business- to the Insurance Code of Consumer Rights and Responsibilities.
“It’s concerning that small business owners are being charged an arm and a leg for something so vital to their operations. It’s up to the governments and the industry to make sure that insurance rates are affordable and there are a variety of options available to small businesses,” Solberg concluded.
CFIB has released more data from a special survey on insurance costs in its recent Insuring Main Street report.
For media enquiries or interviews, please contact:
Brianna Solberg, CFIB
306-713-8071
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region, including over 4,000 in Saskatchewan. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.