ATTRACTING IDEAL CUSTOMERS
"BEING PROACTIVE AS A COMPANY MEANS YOU’RE
OPEN TO RISK MANAGEMENT CONCEPTS FOR WAYS
OF REDUCING RISK AND THEREFORE LOSSES."
water/flooding, cyber breaches,
storm severity, and a more litigious
Canadian society are increasing the
challenges insurance companies face.
This has created a scenario that spells
an increase in insurance premiums
for consumers and a tougher
underwriting process. Hence the term
“Hard Market.”
Here is a little more context.
Historically, and under normal
circumstances, the profits generated
by an insurance company are invested
to keep it financially healthy. When
normal underwriting profits don’t
exist, companies start underwriting
for “cash.” This means that
underwriting rules are tightened and
premiums are increased. The “cash”
that is now earned is used to bridge
the profit shortfalls that are currently
being experienced.
Furthermore, the recent catastrophic
losses that are being experienced in
North America, and the Caribbean
have an effect on the Hard Market.
Why would that matter, you might
ask? In reality, insurance policies
are comprised of layers of insurance
coverage from North American
companies and typically contain
further layers of reinsurance which
make up the balance of coverage. This
extra layer is typically purchased outside
of North America. For example, Lloyds
of London (world renowned underwriter
in the UK) typically uses Canada as a safe
place to invest and write policies. With the
recent loss patterns occurring in Canada,
it is looked upon as a less safe option.
This has a trickle-down consequence
that affects the insurers in Canada and
reinforces the tightening capacity issues.
So, can a disaster such as the recent
hurricane that hit the Bahamas affect
insurance rates in Canada? Yes. It can and
it does.
Not only does this volatility extend to
consumers but it also creates a little bit
of grief for insurance brokers. Insurance
companies are taking longer to provide
quotes, and their capacity for risks that
normally would be easy to place has been
hindered. This leads to policy renewals
arriving late, higher premiums, more
pushback from brokers to soften premiums,
and an overall increased frustration from
customers.
Is there a light at the end of the tunnel?
Insurance is cyclical and we are clearly
in the Hard Market stage of this cycle.
This isn’t the first time the industry has
experienced market conditions like this
and likely won’t be the last. At Gillons, we
have experienced these cycles many times
and have a deep understanding of what it
takes to help businesses navigate through
a Hard Market. We also understand
presenting your business exposures to
insurance companies in an effective
manner. Our process and market
placement capabilities are key in times
like these.
Risk management practices and loss
mitigation practices are also at the
forefront during a Hard Market. Being
proactive as a company means you’re
open to risk management concepts
for ways of reducing risk and therefore
losses. This is integral during a Hard
Market, and insurance companies are
more likely to provide coverage options
at a reasonable price point as opposed to
a reactive approach that typically brings
coverage restrictions and higher pricing.
A proactive approach at Gillons is our
routine. We not only understand the
coverage needs for the risks of today
but we stay abreast of the emerging
risks of tomorrow by providing a proper
assessment of your business and a risk
management plan that is tailored to
your needs. This leads to an insurance
policy that properly covers you for
today’s exposure and a plan that can
help your business grow into the future.
We invite you to discuss our holistic
and proactive approach. It is a great
opportunity for thorough reviews of
your insurance needs, and we encourage
you to ask about how we can keep your
business prepared for what life can
throw at it—during this current Hard
Market and for years to come. +
Myles Kuharski is an Account Executive in Business Insurance at Gillons Insurance Brokers. He is also
President-Elect of the Young Brokers Council (YBC) of the Insurance Brokers Association of Ontario.
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