The younger demographic in the Canadian insurance workforce needs to shift gears. If they continue cruising along with the same strategies they’ve used for the past 10-years, they run the risk of being rear-ended by a rapidly firming insurance marketplace. Facing change is always a challenge. For many in the industry, hard market conditions constitute a brand new concept – one that requires considerable adaptation in underwriting and distribution.
“We seem to go through hard markets every 12-15 years or so. Those market cycles used to be a shorter period of time, but now they seem to be lengthening,” commented Bob Fellows (pictured), head of market management at AGCS in Canada. “As some companies start to restrict capacity or move capacity away from certain classes of business, that’s an opportunity for us, as an industry, to step back and re-evaluate our books and our underwriting focus. For a lot of companies when the market was not as hard, the focus was around growth, but now the main focus is around profitability and getting ourselves back on a solid financial footing.
“That has created some challenges for brokers. In my opinion, one of the biggest issues is that we have an insurance workforce that’s young enough that they haven’t really seen a hard market before. For example, the last hard market I was involved with was in 2002, which is 16-years-ago. So, there are a lot of brokers and a lot of underwriters on our side at AGCS that aren’t used to that environment where we have to go in and get more rate, we have to restrict capacity, and in some cases, we have to pull back from certain classes of business.”
According to Fellows, the key to success in a hardening market is education. Speaking with Insurance Business at the RIMS Canada conference in Edmonton, he described the current market conditions as “a coaching opportunity,” where more experienced workers can guide the younger demographic through the concept of the hard market.
He commented: “If you’re a broker and you’ve spent your whole career so far selling on price and selling on bringing savings to your clients, and now you’ve got to go back to those clients and sell them on increases and restricted coverage, it can be a bit of a daunting challenge. That’s why we’re spending a lot of time educating the younger workforce that’s struggling with the concept. At AGCS, we have a lot of young underwriters who are very smart and have done a fantastic job, but now they have to deliver messages that are difficult to deliver. It’s never easy delivering hard news. It tends to affect relationships, which is why we’re educating and coaching our people around what we’re trying to accomplish and how we can achieve that.”
In his role as head of market management, Fellows fronts AGCS’s strategy for sales and distribution in Canada, and he controls the messaging that various departments are projecting to the marketplace. In a firming marketplace, the message given out is not always what people want to hear. The reality is, in some lines of business insurers are having to part company and say they can no longer entertain that risk. How a company delivers that message and manages those situations will dictate the success and longevity of their market relationships, according to Fellows.
“In my opinion, this is an opportunity for us to really shine as a company,” he told Insurance Business. “We need to work with our brokers and help them still provide solutions for their clients, and importantly, do it in a way that everyone can walk away and feel good about it.”
