When catastrophe hits, many businesses discover too late that their insurance coverage doesn’t measure up. Experts warn that outdated property valuations and overlooked risk exposures are leaving companies vulnerable to hefty financial penalties - shortcomings that could have been avoided with routine policy reviews and strategic planning.
In 2024, insured losses to commercial properties in Canada reached over $1.7 billion, highlighting the financial risks tied to increasingly severe weather events. A 2025 report by Hub International also found that 73% of organizations are underinsured against “profit-threatening risks,” and 96% lack formal processes for identifying and updating property values each year.
That’s why Levi Smith (pictured), a Saskatchewan-based commercial broker, says the role of insurance professionals must evolve. With over a decade of industry experience, Smith advocates for shifting away from transactional selling and toward proactive, risk-based advising.
“[It] seems like the only time you ever realize the building is underinsured and subject to a coinsurance penalty is when you have a claim,” he said. “And at that point, it's already too late.”
The risk is even more relevant in today’s market, where construction costs, building materials and labor have seen significant volatility over the past five years. This unpredictability only increases the likelihood of clients being left exposed at the worst possible moment.
Another overlooked exposure is business interruption insurance. Smith warned that many brokers aren’t discussing how indemnity periods work - or fail to work - for certain businesses.
“The indemnity period could be 12 months, 18 months or 24 months, but not a lot of brokers are having those discussions with the insurance,” Smith said.
Without a clear understanding of recovery timelines, businesses can quickly run out of coverage before they’re operational again. Even more concerning is the lack of regular analysis behind those numbers.
“They should be completing worksheets regularly, certainly at least annually, but depending on the business, maybe even semi-annually,” he said.
It’s in those worksheets that the finer details - like escalations tied to by-law compliance or rush construction costs - often come to light. Smith emphasized that business interruption is not just about keeping the lights on; it's about restoring what was lost.
“Business interruption will replace the profits or gross earnings of a company until they get back up to where they would have been had the loss not occurred,” he said.
When it comes to output losses tied to supply chain breakdowns, Smith draws a line.
“Supply chain management in general is a business challenge that should be managed like any other risk,” he said.
Still, exceptions exist in the form of contingent business interruption—extensions buried in some policies that can cover losses from supplier disruptions.
As commercial clients face an increasing wave of regulatory demands, Smith points out another critical pressure point: compliance.
“I think the key is anticipation and industry specific education,” he said. “We’re seeing a lot more brokers becoming specialized rather than generalists.”
But often, the timing doesn’t align. Business owners typically encounter these requirements at the last minute - when they’re bidding for contracts or renewing licenses.
“That obviously puts them back up against the wall in a last-minute scramble,” Smith said.
In his view, generic advice doesn’t cut it anymore. Proactive compliance checks and deep-dive strategy sessions should be standard practice.
“We should do our best to keep clients ahead of the changes, rather than reacting to them,” he said.
One case in particular stood out to him: a government health contract that required a crime-specific fidelity bond for a contract worker.
“Given the context of the work they were doing, it made no sense,” Smith said. “But you know how the government programs are; they're not going to take the knee and amend their contract when they've already had it set in stone.”
As the industry moves toward advisory-driven relationships, brokers are increasingly positioning themselves as strategic partners rather than transactional sellers - a shift already gaining momentum, said Smith, as more professionals double down on niche specialization.
“The industry is moving more towards being specialists in a few certain niches,” he said. “Being in Saskatchewan myself, there’s a handful that I like to work with that also have some overlap. But if you're in a larger province, you're going to have significantly more clients to choose from.”
Specialization, he added, is not a perk - it’s a necessity.
“Focusing on the business’s overall risk profile, rather than just how their insurance risk is affected, helps clients stand out when negotiating coverage,” Smith said.
In practice, this means asking better questions - ones that uncover operational strengths or vulnerabilities across leadership, training, safety, or even HR.
“We need to ask the right questions, ones that will prompt discussions leading to either yes, we're doing that, or we're not doing that, but we'd like to; how can you help us?” he said.
It’s not about finding a silver bullet but building a case strong enough to stand out.
“The sum of all of these things that we’re highlighting in their submission are going to give them more leverage than they've ever had before,” he said.
And that leverage, according to Smith, comes from managing the narrative as much as the risk.
“Building a narrative for the insurance companies to review and stand out above other businesses that's our job,” he said. “Whether it's at renewal time, or it's a new company, or it's just generally throughout the year.”
