Brokers expect hard market into 2020

Canadian brokers are noticing reduced capacity and high rates for commercial insurance across the country.

“We are probably expecting to see hardening market conditions continue into next year,” said Kent Rowe, the new president of the Insurance Brokers Association of Canada.

By day, Rowe is vice president of commercial lines for Wedgwood Insurance, which has offices in Corner Brook and St. John’s. A former president of the Insurance Brokers Association of Newfoundland, Rowe officially took the helm of IBAC Sept. 19.

Canadian Underwriter asked Rowe Monday about issues that he has observed recently as a commercial broker.

“Commercial brokers right now are experience a hardening market,” he said. “I think that is the best way to classify it. We are seeing some increases in rates and some capacity challenges on commercial lines risks. That exists right across the country.”

A lot of insurers have reduced capacity or higher rates, he said.

Meanwhile, increasing the profile of brokers in Ottawa is one of IBAC’s top priorities right now, Rowe told Canadian Underwriter Monday. He cited the ‘Big If’ campaign as an example. The public awareness campaign outlines the risk to homeowners of overland flood and earthquake.

“Brokers are uniquely positioned to start the conversation,” IBAC CEO Peter Braid said. “‘The Big If’ promotes the important role of the insurance broker in educating Canadians and helping them protect their financial well-being.”

British Columbia may be the first region Canadians think about when asked about earthquake risk. But there is also a risk in eastern Canada, along the St. Lawrence and Ottawa River valleys. Brokers are especially concerned in Quebec because only a small minority [about 3%] of homeowners choose to pay extra for earthquake coverage, while the majority are not covered.

About one in three Canadian homeowners are insured for overland flood risk, the Insurance Bureau of Canada said in a paper released June 18.

That number will increase as flood models improve and as Canada’s four-year-old private flood insurance market develops, IBC said in Options for Managing Flood Costs of Canada’s Highest Risk Residential Properties. The report follows the efforts of an IBC working group that was asked last year by federal and provincial politicians responsible for emergency management to come up with possible options for covering properties at high risk of flood.

One option outlined in the paper is a special pool for Canadian high-risk properties that would otherwise not be able to access affordable flood insurance to cover their losses. Property owners would pay premiums that reflect their level of risk, but those premiums would be only one source of capital for the pool. Other sources of capital could include contributions from government and levies applied to municipal property tax.