How a trade dispute with the U.S. could impact adjuster mobility

Canada’s property and insurance industry is increasing its calls for the country to drop its inter-provincial barriers to claims adjuster mobility, particularly as the prospect of a cross-national trade dispute with the United States looms large.

“Accusations of broken borders. Threats of tariffs. Heightened political rhetoric. Canada’s relationship with its largest trading partner may be headed for a rough patch as the prospect of a trade dispute looms,” Margot Whittington, senior policy advisor at the Insurance Bureau of Canada (IBC) observes in an IBC blog post.

“As noted by the Fraser Institute, this uncertainty is creating a growing imperative for Canadian policymakers to move swiftly to protect the Canadian economy from the potential impacts of protectionist policies,” she says. “One step Canadian policymakers can take is to eliminate interprovincial barriers to trade, capital flows, and labour mobility.

“Specifically, should a Canadian-US trade dispute pose limitations on Canada’s ability to tap into American adjuster capacity, Canadian adjuster capacity will be tested like never before.”

Canadian adjuster capacity was already stretched to the limit in 2024, when four major natural catastrophes happened in less than a month. Canadians filed approximately 228,000 insurance claims following flooding in Toronto and southern Ontario, the Jasper wildfire, the Calgary hailstorm, and flooding in Quebec.

In contrast, Canadians filed 160,000 natural catastrophe-related insurance claims in all of 2023.

Adjusting firms in Canada have drawn from the pool of claims adjusters in the United States when necessary, several industry sources have previously told Canadian Underwriter. 

CU granted one adjuster anonymity to speak frankly about the issue. He said bringing in adjusting specialists from the United States has been a legitimate and long-practiced option for Canadian P&C insurers who are heavily exposed to major Cat claims.

“One analogy I like to use is, if you are in the hospital dying, and the way to save you is to bring in a particular specialist, and if the only specialist available for that job happens to be from Houston, Texas, are you okay with people saying, ‘I’m sorry I can’t do that because he’s not Canadian?’” the source said.

Bringing in adjusters from the United States is part of the trade agreement between Canada and the United States, the source noted.

IBC has acted in the past to confirm in writing that U.S. adjuster capacity is necessary to handle particularly large claims events. This confirmation letter is required under the terms of the trade agreement between the United States in Canada.

But with a trade dispute looming between Canada and the United States and a record year of NatCat claims under Canada’s belt, IBC says Canada will need to drop its interprovincial licensing barriers to adjuster mobility, since capacity from the U.S. adjusting pool may not be as readily available in the future.

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To help the industry handle a large influx of NatCat claims, Canada’s provincial regulators have come up with temporary ways to ease inter-provincial licensing restrictions for adjusters.

For example, after major flooding in Toronto in July, Ontario’s Financial Services Regulatory Authority (FSRA) temporarily allowed licensed adjusting firms to use claims adjusters with out-of-province licenses. FSRA also allowed Ontario insurers to use the services of employees of affiliated insurers.

The temporary restrictions ended in October 2024. But these types of temporary arrangements need to be made permanent, IBC says.

“While this year’s post-catastrophe allowances made by regulators were welcome, given the uncertainty facing the future of mobility, it is critical that we move swiftly to remove barriers to inter-provincial mobility,” says Whittington.

“That’s why a coalition of P&C insurance associations has been calling on Canada’s regulators to work together to establish a licensing reciprocity regime – meaning if an adjuster is licensed in one province, their license is recognized across the country. As it stands, every province has a different process for licensing adjusters. While each province’s requirements vary, the differences are oftentimes minor.

“As the coalition has noted in previous communications with regulators, this fragmented approach to licensing is a disservice to consumers, who benefit from the expeditious processing of claims, particularly during severe weather events. There is simply no reasonable public policy rationale justifying this type of fragmented approach to licensing.”

 

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