This article was produced in partnership with Cansure Insurance
Karen Surca, of Insurance Business Canada, sat down with Ed Quek, vice president of commercial lines and construction for Cansure, and Hans Choi, underwriting segment manager, construction, with Cansure, to discuss the increase in large scale commercial construction, the company’s restructuring to accommodate for the demand, as well as the general trends affecting commercial insurance providers.
For Cansure, being prepared is key to a thriving business model.
Adopting a proactive approach has led the national insurance provider to successfully navigate a volatile insurance climate with ease.
Over the last year and a half, Cansure was keenly aware of the impact that pre-existing market forces, coupled with COVID-19, could have on an already hardened insurance climate. This knowledge propelled Cansure to make necessary internal structural changes.
The company considered restructuring to be the first step to address the challenges of the last 18 months.
“COVID had affected the entire world and it was no different for insurance companies,” Ed Quek (pictured top), vice president of construction for Cansure, explained.
“The challenge of a hard market, plus the COVID environment, made 2020 very challenging. We had to gravitate to a new way of doing things, so we adapted and reorganized our entire company,” Quek said.
Quek pointed out that Cansure chose to move into a “fully functional structure” with a reorganization into nine verticals. The construction vertical represents one of those within the company’s purview.
Hans Choi (pictured immediately above), construction segment manager with Cansure, described the company’s restructuring as a change in “operational workflow” that also stemmed from a need to “embrace the fact that most of Cansure’s team members are spread across Canada and have local expertise and experience.”
By capitalizing on this geographical advantage, underwriters can better address the risk conditions pertaining to their specific area.
Anticipating market trends and being prepared to address them was the second piece of the risk-mitigating puzzle for Cansure and its employees working across the country. This is a strategy that positions the national insurance provider well to meet market demands this year.
A continued construction boom is one trend that Quek and Cansure are keeping a particularly close eye on.
Quek also highlighted that with so many large-scale residential and rental commercial projects in the pipeline in the coming months, providing the corresponding insurance coverage on a matching scale remains a challenge.
“Many in the industry felt that construction would take a hit because the economy is not going to be great due to COVID,” Choi said.
“Within the last 18 months what was supposed to be a downward trend was the reverse: it was an uptrend,” he added.
The costs involved, as well as the labour and materials needed to pull off these projects, also increased as varying economic factors entered the construction equation.
“Interest rates are the lowest they have ever been, and everyone can take out a loan,” Choi stated.
“I have had brokers tell me that developers were shutting down because of the perceived risk but then changed their minds when they realized that there was a huge construction demand. The highest it has ever been, a really big boom.”
Both Quek and Choi agree that an equally glaring trend as we enter the new year is the trend towards building wood frame construction - one that works in Cansure’s favor.
Cansure is one of the few companies that specializes in wood frame construction coverage and the unique risk aspects inherent in this form of construction.
“There is less density in wood frame and, in the West, for example, there is a huge demand for multi-stack townhomes,” Quek described.
He pointed out that wood frame construction is even taking off in Ontario, a colder climate region that has traditionally demanded brick or concrete construction.
The answer, both Quek and Choi outlined, lies in the converging trends in the construction industry towards better sustainability, environmental concerns, and the general push during the pandemic towards buyers wanting larger houses outside the urban centres that lend themselves towards wood frame construction methods.
“Construction is tied to the real estate market and another trend we see is the push, often backed by government incentives, for rental housing,” Choi added.
“There are going to be a lot more rental housing projects out here in Vancouver in terms of the four-storey, wood-frame construction or even five- to six-level framing projects,” he added.
The rental demand for frame-construction projects is also at play in Ontario as construction moves away from the downtown core. Vancouver, though, is a market that both Quek and Choi feel has an extreme rental squeeze.
“Vancouver City Council approved more low-rise apartments with zoning amendments to allow for new buildings being built on busy Main Street,” Choi pointed out. This city provision is meant to help address the estimated 1% vacancy rate.
Not to be overshadowed, the trend towards higher inflation is also being watched carefully by Cansure.
Although inflationary factors could be problematic, in the realm of construction, inflation has turned out to be a good thing.
“People are not dumb. People know that there is value in real estate. It is a hedge against inflation.” Choi stated.
While the construction trends work in favour of commercial developers, Quek and Choi agree that it is taking a toll on insurance providers to keep up with the demand.
“Every construction underwriter in this country is burnt out. However, if we don’t provide the service of getting the right insurance for each construction project then that construction project cannot proceed,” he added.
By focusing on providing risk coverage for existing clients that are large and experienced and encouraging clients to implement the newest risk mitigating technology, such as job security systems and cameras, Cansure is stepping up to the challenge.
“We also have a unique program where we inspect every large project multiple times. We carried out more than 190 inspections last year alone. This is part of our program to help prevent a loss or claim.” Quek concluded.
A proactive approach, having the tools to implement risk-based coverage, and a newly structured business model are enabling Cansure to stand up to the wave of commercial projects that are in the works.
Hans Choi, underwriting segment manager, construction
Hans Choi started at Cansure in 2016 and has grown to become an underwriting segment manager in commercial lines. Over the years, Hans has established a solid working relationship with a range of brokers, demonstrating a strong sense of stewardship and a willingness to take on complex accounts.
Ed Quek, VP of commercial lines and construction
Ed Quek has more than 25 years of commercial underwriting and management experience in the insurance industry. He joined Cansure in 2014 as an underwriting manager and moved his way up to become the company’s vice president of commercial lines. Ed is a fountain of knowledge on all aspects of the insurance industry and is a great contact to assist and support brokers across Canada.
