Canada’s property & casualty (P&C) insurance market is transitioning after years of significant price increases. With premium growth now tapering, brokers and their insureds must navigate a new dynamic amid persisting challenges.
“We are seeing a levelling out in the market and, in some cases, significant softening. That is going to create some challenges for both brokers and our insurance partners,” said Ilan Serman (pictured), who was recently named chief markets officer at Gallagher Canada.
According to Serman, catastrophe risks, particularly wildfires, pose significant hurdles for P&C. The heightened unpredictability of natural disasters, especially during last year’s record-breaking wildfire season in Canada, has prompted some carriers to withdraw capacity from cat-exposed areas.
“It’s getting increasingly difficult to find capacity for some of our clients who might be wildfire exposed,” Serman said.
Canada’s wildfire season is well underway, with firefighters in Western Canada battling the first major fires this year amid warm temperatures and ongoing droughts.
A handful of wildfires forced community evacuations last month, including in Fort McMurray, Alberta, where around 6,600 people were displaced by large flames.
Serman highlighted the challenge posed by intensifying wildfires: “The challenge for an insurance market is where catastrophe models don’t hold up in the same way when you have fires, hurricanes, or earthquakes. I think the insurance companies are having some difficulty responding to that, and in some cases, their responses were to pull out of some areas.”
He also pointed to a potential need for the government to step in amid the increasing risk of wildfires and limited capacity for highly exposed areas.
“There’s a lot of debate in closed rooms about whether there’s a role for government to play potentially in a national fire insurance program, similar to what they do in the US,” said Serman.
“We do have some forecast models that can predict where the natural catastrophes are, where they’re going to go, and we can give the clients advice in terms of when not to build and where not to acquire. [But] quite honestly, I don’t believe anybody has a solution.”
Despite the challenges, the middle market remains a significant focus for Gallagher Canada.
“We still have a relatively small piece of the mid-market space. So, I see lots of opportunity for us to expand there,” Serman said.
Serman’s appointment is part of a recent organizational restructuring at Gallagher that saw new leadership appointments.
Dave Partington, chief executive of Gallagher Canada, now has a wider remit, having assumed leadership of Gallagher’s businesses in Latin America and the Caribbean in addition to his Canadian function.
According to Serman, who previously served as regional president of Ontario, the reorganization aims to ensure that Gallagher’s structure supports both its clients and internal growth.
“The growth that we have had in the last five years is quite phenomenal, and that’s essentially what has pre-empted our restructuring,” he said.
In his new role, Serman will serve as the main liaison between Gallagher and its insurer partners, maintaining and enhancing relationships between the two parties. Taking over from his predecessor, Kevin Neiles, who is retiring at the end of 2024, Serman said he feels fortunate to inherit a well-managed role.
“I have a great foundation from which to work,” he told Insurance Business, adding his goals involve further expanding relationships with key insurer partners and ensuring Gallagher’s internal producers are fully aware of what these partners offer.
He also reiterated Gallagher’s ambition in the Canadian market: to be recognized as the go-to broker in the middle market while handling more complex risks globally.
“We believe that there is not a risk anywhere in the world that Gallagher does not globally have the resources to handle. Sometimes it’s simply a question of pricing on some of the larger risk accounts,” Serman said. “We want to play everywhere where we feel we can add value.”
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