Before the coronavirus outbreak impacted Canadians, the phrase on the tip of many brokers’ tongues was ‘hard market,’ which had affected many lines of insurance. Rate increases in auto insurance across provinces, including Ontario and Prince Edward Island, were practically a given as insurers have been paying out more in claims than they’ve been able to get back in premiums.
These increases have not made the jobs of brokers easy, with one broker calling them the biggest challenge she’s facing.
“Especially for good drivers, it is really hard for us as brokers to explain to a client who has never had a claim or any tickets that rates are going up,” said Judith Pila, account manager at Capital Insurance Brokers in Edmonton, adding that the advisory nature of the job has in turn become more important. “Our responsibility is helping them navigate the current industry situation and giving them as many examples as we can give as to why this is happening.”
Another broker in Alberta has seen insurance markets become less competitive, which likewise puts pressures on brokers and their clients.
“It is not as competitive as it once was, meaning that there’s a lot of insurance companies that have decreased their appetite on what they’re looking for. Rate increases are one thing that they’ve been doing [as well as] eliminating coverage,” said Nicky Fuhrmann, insurance broker at A-WIN Insurance in southern Alberta. “We’ve seen a ton of contracts in Alberta get cancelled with personal lines insurance companies so that has been a real mountain to take on.”
Fuhrmann added that brokers want to get back to a competitive market where insurance companies can set the rates that they need, analyze the risk, and provide competitive quotes for clients. After all, the hard market situation is “bad for everyone,” she said, including consumers, brokers, and carriers.
While brokers recognize that insurance companies need to keep profits top of mind, their actions can make the work of insurance advisors tricky – to the detriment of the end client.
“Certainly as a broker, I need my insurance companies to be around for the long-term and in order for them to do that, I need them to make sound decisions when it comes to the kind of risk that they’re going to take on,” said Joanna Mendonca, president of Staebler Insurance in Kitchener.
However, Mendonca has seen what she calls “concerning conduct on behalf of insurer partners” in the hard market. This includes them not being willing to commit to certain risks until there’s some internal review done of those risks, and making changes to appetite, approaches, and processes effective immediately, on the fly and on a daily basis.
“Those sorts of things make it difficult as a broker to help your insurer partners fulfil their goal, which is to get the kind of business that they’re interested in,” she explained. “It also complicates your delivery to customers when it comes to being able to arrange solutions with them, and pair them up with an insurance company that is aware of the risk that they’re taking on, comfortable with the risk that they’re taking on, and is willing to stand behind the coverage and protect that customer should anything happen.”
In this environment, the most challenging part for Mendonca is that brokers are effectively caught in the middle between the carrier and the insured, and they’re left explaining to customers why they’re not getting the insurance coverage they need for a fair price.
“It makes it difficult to be able to place customers competently,” she said.
