Brokers’ biggest test this year could be in justifying the value of insureds’ commercial policies amid another year of potential rate increases.
“The commercial customer is keenly aware of what inflation is costing them,” said Eddie Staines (pictured), vice president of commercial lines at BrokerLink. “On top of everything, business owners in Canada have seen insurance costs going up and up. As a broker, you can connect those two things and say, ‘inflation is a factor here, the weather is a factor, and this is why your rates are going up.’
“But if we find ourselves in a recession, and we go in with another rate increase, that’s going to be where brokers are challenged.”
Staines spoke to Insurance Business at the Insurance Brokers Association of Ontario (IBAO) Convention in October last year. For the insurance VP, hard market conditions in commercial lines will persist, particularly for large, complex risks and natural catastrophe exposures. Businesses with riskier profiles or loss history will also see higher rate increases.
“Brokers are going to have to connect the value of the product with the price as prices continue going up. And if the prices continue to go up as the recession starts to bring [the prices] of other things down, it’s going to be an extremely challenging conversation,” Staines said.
Many Canadian business owners will make difficult trade-offs as their premiums increase. For brokers, this could offer a prime opportunity to step up and fulfill their role as advisors.
“Certainly, with respect to inflation, brokers need to be concerned about whether the limits are adequate,” Staines said. “Underinsurance can be a real issue in the event of a claim, so that is top of mind for us and something we’re stressing with brokers old and new.”
Despite market headwinds, a dynamic consolidation environment could usher in a wealth of opportunities for Canadian brokers this year.
BrokerLink, one of Canada’s largest property and casualty (P&C) insurance brokerages, is among a slew of organizations changing the broker landscape with its acquisitions. It completed a total of 24 acquisitions in 2022, expanding its footprints in Alberta, Ontario and the Atlantic regions. Its latest deal with Universal Risk Solutions (URS Insurance) became effective at the start of December 2022.
“We’ve grown significantly again in 2022 and passed a significant milestone. We’re now a $3 billion brokerage by direct written premium,” Staines said.
Larger players are tapping into their size and scale to gain more leverage in the market, which will “have a broader impact on the industry,” according to the VP. For its part, BrokerLink aims to continue investing in its people and programs even as the march for expansion continue.
“We believe that insurance is about people, not things, and broker principals considering BrokerLink as a succession option can be confident knowing that we are customer driven; we act with integrity and respect, and we give back to our communities,” Joe D’Annunzio, BrokerLink president, said in a release.
BrokerLink also welcomed more than 200 new colleagues through its acquisitions in 2022. Staines acknowledged that talent acquisition and retention were among the biggest challenges in the insurance industry. As a result, BrokerLink is putting the focus on its people.
“We’re focused on building a great team. If you can build this great team, and you can deliver a good experience to customers. That’s how we’re going to outperform. We’re keenly interested in meeting that challenge head-on and making the necessary investments,” Staines said.
One of those investments is BrokerLink’s academy, where team members can engage in training and development. Recruits that are new to insurance can onboard with a 16-week foundational program, said to be a structured and modular way to start their career on the right foot.
Meanwhile, experienced professionals can also partake in BrokerLink’s two-year commercial lines development program, which Staines described as a “condensed, intense program… that really teaches you commercial insurance.”
“We started it three years ago, hiring cohorts in the sprint. Last year, there were 22 people [in the program], and we’re probably going to do something similar, if not bigger, this year because we’re trying to train and develop that next generation of brokers,” Staines told Insurance Business.
Apart from investing in its workforce, BrokerLink also sees continued digitization efforts paying off in terms of customer satisfaction. Staines said: “Customer expectations and preferences are changing. We’ve got at least five different generations of customers and employees. So, we want to modernize the tools we’re using to deliver the products and services. Everybody’s at a different stage in that journey, but it’s a huge opportunity for those who can meet the customer where they want to be met and do it at scale.”
