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Mapped: North America’s Top Finance and Insurance Clusters

What are the top finance and insurance clusters in North America? We've used location quotient data to identify the highest density communities.

For many companies, business expansion is a strategic move to fuel innovation, reach new customers and establish international credibility. The difficult question to answer is: where should we go?

To choose a new place for business expansion, there are many factors to consider. In the finance and insurance industry specifically, there is a higher emphasis on political risk and the laws and regulations in the foreign jurisdiction. In general, finance and insurance companies should look for places with strong infrastructure, stable government and a highly-skilled workforce.

Identifying strong clusters is necessary to find areas where this talent is located. The Harvard Business Review has argued that clusters help drive innovation, productivity, new business growth and help businesses within the cluster scale. So how do you find a strong finance and insurance cluster?

Site selectors use something called location quotient (LQ). In really simple terms, LQ compares an industry’s share of employment in an individual community with the national average. We’ve taken LQ measurements of North America’s top finance and insurance communities to figure out a) whether there are any surprises and b) which ecosystems have the strongest clusters.

This article is part of a series that looks at the highest-density clusters in North America. This series will include entries on technology, advanced manufacturing, business services, life sciences, creative industries and food and beverage.

Here are North America’s top established and emerging finance and insurance clusters:

What are you seeing?

If the circle is green, it’s a “true” cluster. If it’s red, then a cluster effect isn’t evident (also known as a “false cluster”). The circle size is representative of total cluster employment – the bigger the circle, the more employees. As you can see, a community can have high employment in a particular industry but NOT be a cluster.

Who sticks out for finance and insurance concentration?

Toronto, Montreal, Quebec City and Vancouver stand out as the only “true” clusters. The few others that do exist are concentrated around the Toronto-Waterloo Corridor in Southern Ontario. It may come as a surprise that known financial hubs like New York City and Chicago are not listed as “true” clusters. As with earlier editions in the “Mapped” series, our hypothesis is that Canada has a limited number of communities that provide the ideal environment for these types of clusters, so those communities end up with a very high concentration of things like finance and insurance businesses. In the US, due to its sheer size relative to Canada, there are more communities with the environment necessary to support growth in finance and insurance, so tech businesses are spread out among a much higher number of options.

Let’s zoom in on the Toronto-Waterloo region:

Finance and insurance clusters in the Toronto-Waterloo Corridor

That’s three more communities that qualify as legitimate “true” clusters, all within ~150km/93mi of each other.

Here are the top 5 large finance and insurance clusters in North America – defined as high LQ communities with total cluster employment over 75,000:

  1. Toronto – LQ = 1.865 – Total cluster employment: 280,515
  2. Montreal – LQ = 1.229 – Total cluster employment: 96,115
  3. Philadelphia – LQ = 0.705 – Total cluster employment: 160,032
  4. Dallas – LQ = 0.699 – Total cluster employment: 196,464
  5. New York – LQ = 0.686 – Total cluster employment: 519,299

Here are the top 5 emerging finance and insurance clusters in North America – defined as high LQ communities with total cluster employment under 75,000:

  1. Waterloo – LQ = 1.569 – Total cluster employment: 16,835
  2. Quebec City– LQ = 1.442 – Total cluster employment: 23,450
  3. Oshawa – LQ = 1.271 – Total cluster employment: 9,520
  4. Vancouver – LQ = 1.226 – Total cluster employment: 58,830
  5. Hamilton – LQ = 1.176 – Total cluster employment: 16,950

As you can see, Toronto and Montreal stand out as the largest finance and insurance clusters while other Canadian cities top the list of North America’s emerging finance and insurance clusters.

Waterloo stands out with an LQ of over 1.5 (generally speaking, an LQ score greater than 1 is good and less than 1 is bad). This comes as little surprise. Waterloo is home to three major Canadian insurance headquarters, including Sun Life, Manulife, and Economical. The history of the University of Waterloo is tied up in the insurance and finance industry, with its world-class mathematics programming beginning with a stated goal of feeding local insurers with required talent. Wilfrid Laurier University is also well-known for producing finance-oriented graduates.

Want to discover more about our dynamic ecosystem?

Waterloo EDC has comparative LQ data for communities across North America for multiple industries, including technology, advanced manufacturing, life sciences and more.