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CPA Canada chief economist Canadian Underwriter

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The longer the COVID-19 pandemic drags on, the longer businesses will struggle and the risk that they close their doors for good, an economist is warning, and that spells bad news for the insurance industry.

Canada is navigating through a second wave of COVID-19 infections and certain “targeted” regions and business segments are facing yet another round of government-ordered lockdowns. For example, Ontario announced tighter restrictions on Toronto, Ottawa and Peel Region heading into the Thanksgiving weekend. A modified version of Stage 2 restrictions included no indoor dining, the closing of gyms, movie theatres, and casinos for 28 days.

Ontario announced Friday a geographical expansion of restrictions, applying the same measures in York Region, which borders Toronto to the north, effective Monday. Other communities in the province face similar action; in Hamilton, for example, a spin studio was at the centre of the largest fitness centre-related outbreak in the country (69 cases as of Thursday).

In New Brunswick, the government made a similar move prior to Thanksgiving, closing “close contact personal services” like hairstylists and spas in two regions.

The Canadian Federation of Independent Business, which represents small and medium-sized businesses, has been regularly highlighting commercial struggles as the pandemic More than half (56%) of its members recently said they will not easily survive a second wave of shutdowns, the group recently reported. Earlier, the CFIB said it would take a year-and-a-half on average for small business activity to normalize.

iStock.com/AndreyPopov

Economic capacity is at risk. Other industries that rely on the continued operations of businesses, such as insurance carriers and brokers, face losing business that could be gone from the industry forever.

At issue is the lack of a pandemic plan, said Francis Fong, chief economist at the Chartered Professional Accountants of Canada. He spoke to Canadian Underwriter recently about the economic risks Canada and the U.S. are facing as the pandemic drags on.

Since COVID-19 was declared a global pandemic on Mar. 11, 2020, the economy has gone through fits and starts for much of the year. Lockdowns were put in place in the spring to help reduce case counts. During the summer months, case counts dropped to around 400 per day nationally. But now the country is seeing more than 2,000 cases a day since the beginning of October.

But a return to more spring-like shutdowns is putting some businesses at risk, Fong says. Without a strong pandemic response plan to help keep the virus at bay at least until a vaccine becomes available, Fong said, businesses will continue to suffer. For the P&C industry, that could mean an evaporating pool of commercial business.

“The longer the pandemic goes on,” Fong said, “the more risk there is that those businesses end up throwing the keys on the table and say, ‘What’s the point? Why keep dragging this out? I can’t afford it. I still have fixed overhead I have to pay.’ And they walk away. Each time that happens, that’s a little big economic capacity that we’re never going to get back.”

Fong noted the amount of corporate debt was already a concern before the pandemic. As reported by the Toronto Star in July 2020, Corporate Canada’s debt (both loans and debt securities) totals $2.7 trillion — or the equivalent of 118% of the entire GDP, up from 85% in 2008. “This debt-to-GDP ratio is the third highest among G20 countries — behind only China and France — and the 11th highest in the world,” the Star reported.

As the economy continues to contract, tightening credit conditions could create real challenges, Fong said.

“Household [debt] gets a lot of the focus,” he said. (StatsCan reported in June 2020 that Canadians owe $1.77 in credit market debt for every dollar of household disposable income.) “Household debt is at record levels, but so is corporate debt. How much longer can we feasibly expect these businesses and corporations to manage this pandemic at this lower level of revenue?”

 

Feature image by iStock.com/shaunl



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New task force to advocate for reopening of York Region businesses

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With input from the business community and regional councillors, York Region Public Health will provide the plan to the premier and chief medical officer of health

A newly formed York Region Public Health task force will create a strategy that will be provided to Premier Doug Ford and Ontario’s chief medical officer of health to advocate for the safe re-opening of businesses ordered to close down to ease the spread of COVID-19.

The task force will review the feedback it has received from the business community and study the measures required to allow businesses, including restaurants and gyms, to safely re-open following the 28-day period of the modified stage 2 that York Region entered on Oct. 19, according to a joint statement issued by York Region chairman and CEO Wayne Emmerson and medical officer of health Dr. Karim Kurji.

“York Regional Council and York Region Public Health remains committed to protecting the health and safety of our 1.2 million residents. At the same time, we cannot ignore the financial and personal impacts these restrictions have on our community, including the economic impact on large, medium and small businesses alike,” they stated.

The early findings of the task force will be shared at a public meeting on york.ca/live Thursday, Nov. 5 beginning at 9 a.m. 

Following the discussion with regional council, public health will finalize the measures businesses need to implement to safely re-open.

The initial 28-day period of modified stage 2 COVID-19 restrictions ends Sunday, Nov. 15, 2020 at 11:59 p.m

To help stem the increase of COVID-19 cases, the Ontario government restrictions include the closure of indoor dining and drinking in bars and restaurants, and the closure of gyms, fitness centres, cinemas, performing art and gaming venues.

“The concerns of our residents, our municipalities and our local business community are genuine. By working together and supporting each other we can get through this second wave and continue to build strong, caring and safe communities,” they said.



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Fights in Front of Fans Test Boxing’s Business in the Pandemic Era

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“My brother is the one holding the mitts, but it’s still my dad right there,” Santa Cruz said. “Family always wants the best for you.”

Still, Davis is the fight’s A-side: a fast, elusive power puncher with his own compelling back story. His coach, Calvin Ford, started coaching at a boxing gym in Baltimore after serving a 10-year prison sentence. Davis started training with Ford as a grade-schooler, but the boxer’s circle now includes celebrities like Drake and mentors like Floyd Mayweather.

Normally those story lines, and two aggressive fighters, might combine to support ticket and pay-per-view sales. And Davis’s promoters point to his string of sold-out fights in cities like Baltimore and Carson, Calif., as evidence that they needed to open Saturday’s event to paid spectators.

The difference now is that those fights took place before the pandemic disrupted live sports, and forced limited crowds in the rare instances when they were allowed. San Antonio is in Bexar County, which has averaged 201 new coronavirus cases per day over the past two weeks, about 10 cases per 100,000 residents, but the promoters got approval for thousands of fans anyway.

Davis last fought in December, earning a 12th round technical knockout against Yuriorkis Gamboa, a veteran fighter from Cuba.Since then, live events and industries that require physical gathering, like bars and movie theaters, have struggled amid government restrictions, and the economy has had difficulty rebounding.

And the boxing pay-per-view market was already under pressure. February’s heavyweight rematch between Tyson Fury and Deontay Wilder attracted a reported 850,000 pay-per-view buys, plus 300,000 more online sales. Those figures more than doubled the reported number of buys for their first fight, but still fell short of the 2 million buys the fight’s co-promoter, Bob Arum, had predicted.

Espinoza acknowledged the pandemic had altered the household budgets of boxing fans. And, he said, restrictions on public gatherings have meant that the usually thriving market for theaters and sports bars has “all but disappeared.” Even a lack of large social gatherings is expected to hurt sales.

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Borèal names new business school dean

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Jean Cotnoir was recently appointed dean of the School of Business and Community Services at Collége Borèal. 

Holding a Bachelor of Education and a specialization in special education, Cotnoir has more than 20 years of experience in the sector. 

Having taught in Pembroke, Blind River, Yellowknife and in Sudbury, he worked as a Program Consultant for the Conseil scolaire catholique du Nouvel-Ontario from 2005 to 2010. 

He joined the Collège Boréal team in 2010, where he held several strategic positions, including, since 2014, that of director of marketing and liaison.

In 2018, Cotnoir received a Collège Boréal Award of Excellence for his exceptional commitment to students and to Boréal’s values of excellence, humanism, inclusion, innovation and respect.

A graduate of the Northern Leadership Program, Cotnoir will complete, in December 2020, an Executive Master of Business Administration with a specialization in Human Resources, at the University of Fredericton.

Cotnoir’s new duties will include the planning, deployment, and ongoing evaluation of the School of Business and Community Services’ programs. He will also ensure the school’s programs and services meet the high standards of students and industry at all Collège Boréal campuses.

His responsibilities will also include the planning and management of online programs offered through Boréal en ligne (Boréal’s online program offerings), the college’s literacy programs, the Testing Centre, and the Social Innovation Centre for Children and Families.

Cotnoir succeeds Diane Sénécal, who left the college in September for a position at the Collège Communautaire du Nouveau-Brunswick. He will take up his new duties Nov. 2.

“Jean Cotnoir has had long-lasting impacts everywhere his career has taken him,” said Lyne Michaud, vice-president, academic, in a press release.

“We are thrilled that his vast experience in education and his profound knowledge of the post-secondary sector will continue to be of benefit to Collège Boréal as he takes on his new role with the academic team.”

“I am thrilled to be taking on this new challenge and to have the opportunity to serve as dean,” said Cotnoir.

“I am especially looking forward to working even more closely with members of the School of Business and Community Services, to contributing to the student experience, and to supporting the training of future leaders.”

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