The coronavirus pandemic has made brokering insurance more difficult. Not only have brokers had to adapt their operating models to a digital-first approach, but they’ve had to do so at a time when the property and casualty (P&C) insurance market is hardening and clients need more communication, advice and support than ever before. There’s a lot of change happening all at once.
Joshua Krenus (pictured, top right), president and CEO of Alteri Insurance Brokers in Vancouver, said he’s been “pleasantly surprised” at the ability of his team to adapt to the “new normal” and continue business remotely. As a relatively young brokerage – Krenus founded the firm in 2017 – Alteri is a technology literate business, at which employees are used to using digital tools like Slack and Zoom to communicate. From that perspective, Krenus said the pandemic-induced operational shift was “relatively seamless and easy,” and that his employees’ efficiency and productivity when working at home actually “skyrocketed.”
What’s been more challenging for the Alteri team is the task of placing new business with the standard markets. Krenus explained: “A lot of the standard markets seem to have decided that they’re going to focus on current clients and push through renewable business at this time. They’re not writing a lot of the classes and lines of insurance that they would normally write in other times. We’ve sent in countless submissions to standard markets, and we’re getting the same reply: ‘Sorry, we’re not dealing with new business right now.’ That’s a little bit frustrating because we’ve had to use MGAs when we have perfectly good standard markets that would normally take care of this business.”
Another change Krenus has seen from the standard markets is an increase in carriers reducing commercial policies upon renewal from 12-month terms to six-month terms during the COVID-19 period. He commented: “We’ve tried to have conversations with carriers about why, but it’s come down as an order and the underwriter can’t really answer. I’m assuming it’s because they don’t really know how COVID-19 is going to affect a particular building or this business, etcetera. But it’s going to create a lot of work for us come November, December, January, because these accounts are coming up for renewal twice in one year. We’re essentially doubling our renewal book in one year, which is tough.”
Fellow brokerage owner, Sam Feldman (pictured top), president of Wilson M. Beck Insurance Services in Calgary, has noticed similar challenges to Krenus. In the keynote panel at IB Insurance Connect Canada, he described the pandemic, on the back of an already hardening P&C insurance market, as “probably the most difficult time” the industry has seen in the 20-years he’s been in the business.
“It’s difficult from the perspective of capacity issues from insurance companies, access [to markets], clients and customers having financial issues, uncertainty of the future, uncertainty of politics, and so on,” said Feldman. “It’s a very difficult world around us, and when you have uncertainty, insurance companies (from what I see) tend to start retracting. And when you have retraction in the marketplace, it makes brokering business significantly more work, significantly higher cost, and, in a lot of ways, we’re burdening our clients with higher insurance rates when business is low. It’s been like that for, call it the last year, but it’s really supercharged since COVID-19. I would say the word ‘uncertainty’ is the biggest problem […] in the insurance world today.”
As Feldman alluded to, brokers have been tasked with a lot of tough conversations in recent months. Having to approach clients with (sometimes significant) rate increases at a time when their revenues are also down due to the pandemic is not easy. The problem is, many people think these challenges are a direct result of the public health crisis, when, in reality, these trends have been brewing in the P&C market for almost a year.
“There’s a lot of education going around in terms of helping clients understand what is driving rates up, how insurance is a global industry, and how it’s the float within an insurance company that actually drives investment revenue, whether they’re making money or not,” said Karim Chandani (pictured immediately above), vice president of hospitality at Hub International. “The reality is that insurance companies have not made any money on premiums probably for the last five years. So, it’s definitely a lot more work [for brokers]. When you look at each renewal, you’re spending a lot more time [and] it’s challenging with underwriters who are working from home [and dealing with their own home distractions]. It’s more challenging, there’s a lot more at stake, but there are also lots more opportunities.”
