October 6, 2020 by David Gambrill
Brokers are having trouble finding coverage for their clients these days, and the impact of Canada’s hardening P&C insurance market is fast becoming a strong challenge to the broker channel, as Canadian Underwriter’s 2020 National Broker Survey reveals.
Results of the survey will be published in the forthcoming October/November 2020 print edition of Canadian Underwriter. The survey of 220 Canadian P&C brokers nationwide did not list carriers’ reduced capacity among major challenges facing brokers this year. However, brokers rated all other challenges as less problematic than during previous years. And in the open-ended question asking brokers to highlight any top challenge not listed in the survey, many write-in answers cited the hard market as particularly challenging.
One open-ended survey question asked if brokers had any advice for their fellow brokers on how to further develop trusted advisor status with clients. One broker replied: “Stay out of the business. It’s the worst it’s been 35 years. Essentially ‘CLOSED’ for business!!!”
This tongue-in-cheek comment about the hard market aside, the job isn’t easy these days, as the survey numbers show.
As in past surveys, Canadian Underwriter listed 10 common challenges for brokers. Over the past three years, including this year, the Top 3 challenges have been:
Rapid technological change, a threat we added to the list this year, came in at 47% (1% above broker consolidation).
When asked this year about strong challenges to the broker channel, the hard market made its presence felt in the “other” category. In open-ended answers, several brokers reported anxiety about the impact of the hardening P&C market. Written answers linked to a hard market included: “lack of flexible underwriting,” “the companies unwilling to write business,” “lack of insurance capacity.”
A “plummeting economy, while rates are still increasing,” one broker observed about the channel’s strongest challenge in 2020.
Perhaps the biggest impact of the hard market could be seen in the survey question asking brokers to identify the most successful actions and investments for strengthening their business. The top overall strategy this year was product training and education, as it was last year. But perhaps most notable is the three-year trend of how many brokers graded “changing the carriers you work with” as a best practice (i.e. grades between 8-10). The number is noticeably on the incline — up to 36% this year from 28% two years ago.
This suggests brokers are giving more thought these days to switching markets, as carrier capacity for certain lines of business dries up. “From year to year, we all know that carriers are fickle,” one broker wrote. “We have to be on our toes, knowing when to change carriers for a client.”
But despite the rigours of working double-time trying to find appropriate markets for their clients, the angst has not played out in the brokers’ job satisfaction scores.
This year’s survey demonstrated that a vast majority of brokers enjoy the challenge. Eighty per cent of the 220 brokers in our survey rated their job satisfaction between 8-10 on a scale of 1-10 (with 10 being ‘Extremely Satisfied’). Of those who rated the job between 8 and 10, 42% rated their job a 10, which is the highest percentage of brokers to rate their jobs at the highest end of the scale over the past three years.
Two-thirds (66%) of brokers surveyed agreed either somewhat or greatly with the statement: “With all of the recent and anticipated changes in the insurance industry, brokers face more opportunities than threats.”
Feature image courtesy of iStock.ca/DNY59