RSA Canada’s 2022 decision to discontinue its Canadian Northern Shield (CNS) brand created lasting challenges for insurance brokers and homeowners in British Columbia, a province already facing pressure on catastrophe insurance capacity due to earthquake, wildfire and flood exposure.
The closure removed an established insurer from the provincial property and casualty market, forcing brokers to transfer existing policies to other carriers at a time when catastrophe coverage was becoming more expensive and harder to obtain. Canadian Northern Shield had received an AA- Insurer Financial Strength rating from Fitch Ratings in July 2022, shortly before the brand was discontinued, indicating the exit involved an insurer rated as financially strong rather than one in distress.
Cassie Ayers, then a personal insurance trainer at Megson FitzPatrick, told Insurance Business Canada that replacing CNS coverage was especially difficult in areas with high earthquake exposure. Vancouver Island presented one of the greatest challenges, she said, because insurers had limited reinsurance capacity for earthquake risk. Brokers serving wildfire- and flood-exposed communities faced similar constraints. Megson FitzPatrick moved its CNS clients to other insurers through coordinated placement arrangements, though Ayers said each file still required significant individual attention.
Premiums Rise as Coverage Options Narrow
Canadian Northern Shield had offered some of the most competitive rates in parts of British Columbia before its closure. According to Ayers, moving customers to other insurers often led to substantial premium increases, compounded by rising construction costs that pushed up property replacement values. Replacement policies frequently came with different deductibles, limits and covered risks, meaning some policyholders could no longer secure the same level of protection, while others paid more for reduced coverage.
The transition also disrupted renewal administration, with some customers receiving replacement policy documents closer to their renewal dates than usual. British Columbia’s catastrophe exposure added further complexity: earthquake risk is concentrated around Vancouver Island and the Lower Mainland, wildfire exposure is significant in the Interior, and flood risk extends across multiple regions.
Ayers said insurers had sharply restricted earthquake coverage in the six months before her interview, cutting available limits, raising deductibles, and in some areas excluding earthquake protection altogether. Most of her clients could still obtain some earthquake coverage, she said, but the added premium sometimes amounted to roughly half of their total insurance cost. Insurers can also factor in a property’s construction year, building materials, proximity to known faults and ground conditions when assessing earthquake eligibility.
The scale of potential losses underscores the stakes: a magnitude 9.0 earthquake in British Columbia was estimated to cause losses approaching $75 billion, raising concerns about insurers’ capacity to cover catastrophe-exposed properties in the province.
Insurers Respond Unevenly to the Policy Shift
The redistribution of CNS policies affected underwriting capacity across Western Canada, with insurers taking varied approaches to the additional business. Some carriers treated the closure as an opportunity to expand broker relationships and attract new customers. Others imposed restrictions — Ayers reported that one insurer declined to accept applicants whose most recent coverage had been with CNS, while certain carriers agreed to take on CNS policies only if brokers committed additional commercial business or placed policies from other regions with them.
Canadian Northern Shield had a long history in British Columbia before becoming part of RSA Canada. In October 2007, Royal & SunAlliance Canada Group agreed to acquire CNS from The CUMIS Group Limited for approximately C$75 million in cash. At the time, CNS generated about C$164 million in annual premiums based on 2006 figures and distributed personal property, commercial and private automobile insurance through more than 200 brokers across the province. The deal was expected to make Royal & SunAlliance Canada’s sixth-largest property and casualty insurer.
Rowan Saunders, then president and CEO of Royal & SunAlliance Canada, said at the time that the acquisition would diversify the group’s business and give brokers and customers added underwriting capacity and expertise. CUMIS Group CEO Kenn Lalonde said the sale reflected his company’s strategy of focusing on credit unions and their members, as CNS served a broader customer base. Nearly 15 years later, the retirement of the CNS brand presented a markedly different challenge for British Columbia’s insurance market.
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