Brokers who were nimble, ready to change with the times, and acted pro-actively when COVID-19 first emerged as a threat are the ones faring the best three months later, one broker leader says. Those who didn’t are struggling.
“Those brokers who were ready to make the transition to, first of all, work remote and be able to do that effectively and adopt that digital transformation quickly were able to carry on business,” said Roger Hacala, past president of the Toronto Insurance Council (TIC).
“The other part of it is also how well they got out in front of clients and started to talk about, ‘What is this going to mean to them?'” he added. Successful brokers were able to manage the clients through that process of analyzing their emerging risks in the new environment.
“We’ve been in a situation where we’ve still been able to continue to pursue new business,” Hacala said. “It’s just a matter of looking at it differently in terms of what we’re actually doing.”
Hacala is national practice leader of BFL Canada Risk & Insurance Services. He noted that not all brokers were able to get out in front of the pandemic. “There are some brokers who weren’t able to make that shift really quickly and they’re suffering because of that, based on what their client mix may be,” he said.
Hacala was speaking as part of a panel discussion in Canadian Underwriter’s webinar entitled COVID-19 and the Economy: The Impact of a Recession on the Canadian P&C Industry.
Some brokers may be facing tough times ahead, Hacala observed. For example, their revenues may be affected by clients that are headed towards bankruptcy. “I think [one thing] that hopefully all groups are paying attention to is their receivables,” he said.
He noted that not all brokers may be thinking about protecting their receivables. “You got to make sure you’re not suddenly letting those get away from you,” he cautioned. “You’re not going to want a client suddenly going into default [and you] collected commissions only on an account, and suddenly you’re responsible for the entire premium in that default situation.”
Having a diverse portfolio is also essential to surviving not just this recession, but any future challenging times, he said. “The more diverse your portfolio is with your client base, and the more insurer support you have, the better positioned you are to be sustainable in the current environment.”
Hacala discussed “winners and losers” in the pandemic from the brokerage perspective. But one group that really deserves credit are the risk managers, said Alister Campbell, president and CEO of the Canadian Property and Casualty Insurance Compensation Corporation (PACICC), pointed out. Their jobs are to advise on risk and prepare companies to reduce their exposure to disasters exactly like this one — a pandemic.
“One group that are real winners are risk professionals,” said Campbell. “Risk officers in our insurance companies, the risk managers in our brokerages, who insisted that senior management spend valuable time, that they grudgingly conceded to do, [to prepare] a disaster recovery plan and a business continuity plan and keep it refreshed and updated. Our industry proved to be extraordinarily resilient in terms of its response and its ability to move from an office to a remote working environment, and maintain service levels to brokers [who then] maintained service levels to customers.
“I think there’s a lot to be said for the overall idea that we demonstrated that we eat our own cooking — the stuff we ask our clients to do,” he said of practising risk management. “The pandemic has tested us and, as an industry I think, we have performed well.”