May 11, 2021 by David Gambrill
Brokers appear to be cutting their insurer partners a bit of slack during the pandemic, with more brokers agreeing this year that insurers are striking a fair balance between the interests of carriers and brokers.
Over the past three years, Canadian Underwriter’s annual National Broker Survey has asked brokers to rank their level of agreement with the statement: “Insurance carriers are striking a fair balance between the interests of carriers and brokers.”
Brokers’ agreement with the statement has typically hovered in the low-40% range over the past two years (40% in 2019, up to 42% in 2020). However, even after a full year of selling during a pandemic-induced economic meltdown, and despite the huge challenge of selling in an ongoing a hard market, the level of agreement peaked at 45% the 2021 National Broker Survey.
Granted, that level of agreement is low. But the baseline is low to begin with. For example, a common theme underlying P&C industry humour is that brokers will always give insurers a hard time over how they do business. “We’re used to it,” one insurance company executive recently quipped to a broker who jokingly threatened to give the CEO a hard time during a video presentation.
And so brokers would be excused for giving their carriers a rough time when insurers all around them are increasing the rates of brokers’ clients’ rates — especially during a period when business clients are closed to contain the spread of a pandemic and home and auto insureds simply have no additional funds to pay. This is to say nothing of carriers severely restricting or cutting capacity to cover hard-to-place business lines.
And yet, if you look at the survey data, it appears as though brokers increasingly agree that insurers are striking an appropriate balance between their own interests and those of Canadian consumers.
In part, this could have something to do with the fact that P&C insurers have offered consumers about $2.5 billion in auto insurance premium relief.
But the survey result may also reflect the fact that brokers now have a better understanding of the insurers’ rationale for hard market conditions, even if brokers may not in principle agree with that rationale. That said, brokers understand the P&C industry has a social responsibility to make sure Canadians are insured, no matter how hard the market may be.
“The Canadian economy is dependent on certain industries,” as president and CEO of Marsh Canada Sarah Robson observed during the Canadian Underwriter webinar, Brokerage Executive Outlook. “I think we need to make sure in our role as brokers that we are working with insurers to make them understand that [they need to underwrite] the hard stuff as well to support the Canadian economy, and allow the economy to continue to thrive. That’s the industry’s obligation.”
Feature photo courtesy of iStock.ca/PeopleImages