Canadian Underwriter

Opinion: How to end subscription policy bottlenecks

October 21, 2022   by Douglas Morrow

gear breaking under stress.

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While the worst of the hard market in Canada is gradually drifting behind us and COVID-19 is taking something of a holiday, not all is rosy, especially for commercial lines business.

Brokers worked tirelessly over the past several years to assist insurance company partners in explaining and selling premium increases to clients as needed market corrections. Brokers have reduced individual carrier capacity on virtually all property placements to better spread risk.

Insurance companies have been the main beneficiaries of this hard work. As the marketplace settles slightly, we need to look forward to easier discussions and renewal processes around now-profitable books of commercial business.

Brokers managed rate and spread-of-risk issues well. Now, carriers — together and individually — need to remove or revise unnecessary and cumbersome rules. These barriers to trade now restrict brokers’ ability to place business efficiently and confidently.

Perhaps the most obvious barriers surround carriers’ refusal to follow competitors’ wordings and collaborate on subscription placements to mutual benefit. Aside from insurer quality issues and financial rating, this practice is a rabbit hole for the industry. It needs to stop.

The real issues are rate, capacity/line, and risk quality. Period. And while there could be future court decisions based on wording interpretation, it’s historically unlikely. In no way does it compare with the advantage that has created this ‘crisis’ — virtually all property risk in Canada is now subscribed, and the major carriers have exceptional spread of risk compared to just a few years ago.

Many companies follow the IBC type of policy format, with individualized amendments. Others have proprietary wordings developed carefully with internal resources. In virtually all cases, legal counsel has been retained at great effort and cost. While there is differentiation, these differences are hardly material. Rather, there is an inherent consistency in the principal criteria of the insurance coverage itself — what is covered and excluded, and general underwriting appetite.

Carriers must stop these practices and work together. It’s more than offset by the mandated spread of risk component and increased rates. Of course, each carrier should decide to lead or follow — but at minimum these practices should cease:

  • Refusing to follow another carrier’s wordings;
  • Insisting on being the lead carrier (making this a condition of capacity is lazy and unprofessional);
  • Insisting your version of a particular exclusion must be used by the lead carrier;
  • Refusing to accept more line than the agreed lead carrier;
  • Refusing to move to an excess or subscriber position from lead;
  • Insisting on using intermediate staff adjusters when placements incorporate a control approach to loss services; and
  • Charging higher rates for the use of control adjusters.

As the market stabilizes, brokers deserve a path to reasonable marketing processes that offer more predictable expenditures of time and effort.


Douglas Morrow is CEO and managing director of Excel Insurance Group. This article is excerpted from one that appeared in the October issue of Canadian Underwriter. Feature image by