With businesses facing rising inflation, continued supply shortages and soaring prices amid a Consumer Price Index hitting a 30-year high¹, we wanted to shed some light on what this means for you in terms of the impact on your insurance.

Global demand for building materials escalates

Prolonged global demand continues to adversely impact the cost and availability of building materials worldwide. Building materials that were once manufactured domestically are now frequently made overseas – and they’re shipped everywhere. Demand for materials has become a global marketplace, with our neighborhood lumberyards competing with global forces for the same materials.

Last year, residential building construction costs increased 18.1% while non-residential costs grew by 6.9%². Softwood lumber pricing showed one of the most dramatic increases with a year over year increase of 31.2%³.

Beyond lumber, the Industrial Product Price Index, which tracks the price of all commodities sold by manufacturers in Canada, shows that prices rose a staggering 16.4% in 2021⁴

Rebuilding yesterday’s buildings at today’s prices

These challenges will see many of our commercial property customers struggling to have their damaged properties reconstructed for the values stated on their insurance policies – which may not have been updated to cover replacement costs at today’s prices, should a major loss happen. Some business owners may find their insurance limits to be understated by as much as 50% to 75%, resulting in significant unexpected out-of-pocket costs, business disruption or termination of operations. 

Up to 1 in 4 businesses close their doors following a major loss

Each year, disasters including floods, windstorms and wildfires impact hundreds of businesses in Canada. Even more common events, such as building fires, often have devastating results. The US-based Insurance Institute for Business and Home Safety estimates that up to 25% of businesses close their doors following a major loss⁵.

How we help protect our customers

Our customers took time, effort and hard-earned investments to create and sustain their business, especially through these unprecedented times. We help ensure your continued success, even if the unexpected happens, by regularly assessing the current value of your buildings. Insurance to Value (ITV) is an assessment of the complete cost to replace insured property – a critical element of a comprehensive property insurance program.

For more information about ITV, Contact us today!

1 StatsCan Consumer Price Index from December 2021.
2 Statistics Canada. Table 18-10-0135-01 Building construction price indexes, by type of building.
3 Statistics Canada. Table 18-10-0266-01 Industrial product price index, by product, monthly.
4 Statistics Canada. Table 18-10-0266-01 Industrial product price index, by product, monthly.
5 Institute for Business & Home Safety (IBHS)