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Signs of the hardening market in property lines


October 23, 2018   by Jason Contant


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One multi-location brokerage in Nova Scotia is seeing hardening of property lines in the province, in line with a recent spike in property claims ratios across the country.

Canadian federally regulated insurers have incurred $5.5 billion in property claims up to the end of the second quarter of this year (including both home and commercial lines). That’s a 22% increase over last year, when they saw $4.5 billion in claims over the same period. Overall claims ratios for Canadian P&C home insurers in personal property lines increased from 64% last year to 71% this year.

“The markets are going rate by peril,” said James Kerr, personal lines broker and team manager with AA Munro Insurance in Glace Bay, N.S., a brokerage with about 20 locations in Nova Scotia. “The information required now compared to not-too-long ago has really increased; you’re seeing a lot of difference in premiums based on the percentage perhaps of a finished basement or the age of a hot water tank or the updates of a particular house. So, it all comes into play much more than it ever did.”

Kerr was responding Monday to a question from Canadian Underwriter about whether he is seeing signs of market hardening (increased rates and less coverage) in property lines.

By how much are property rates increasing? “A few hundred [dollars] isn’t out of the norm,” Kerr said. Although he acknowledges it’s “a bit of work,” it is a good opportunity to brokers to educate and gather information from their clients.

“Now you can get into a much more detailed conversation with your client: how the companies are looking at you specifically based on what you’re updating on your house, your claims, even your payment history. These all go into making a price for you individually, which clients actually like to hear. It allows you to have a conversation with someone, saying, ‘These are the things that do make a difference on your price,’ which is actually a good conversation to have with people.”

He calls these conversations a positive out of “all this rate by peril. At least we can help them in talking about their risk specifically, especially if they get a renewal and they make some changes and it can go down by a few hundred dollars. It is showing the strength of a broker.”

It’s not just personal property lines that are seeing hardening, commercial property is also seeing hardening. For example, in commercial property, especially commercial rentals, some markets are just not touching it any longer, Kerr said.

On the personal property side, sometimes brokers have to go to a managing general agent or a non-standard market. “The standard markets have caught up to the non-standard markets in pricing,” Kerr said, “which shows you the hardening market really starting to come into play now.”