What are some of the hottest trends in Canadian P&C commercial lines right now?
Insurtechs in the SME [small and medium sized enterprise] customer segment is a key driver in today’s commercial market, says Jim White, chief sales officer and executive vice president of general commercial insurance at HUB International Ontario. There are also been advances in the cyber and privacy risk management area. And finally there is the anticipated consolidation of employee benefits brokerages.
Wait a minute: consolidation of employee benefits brokerages? How will that affect Canadian property and casualty commercial brokerages?
“It is interesting to note that this trend [towards consolidation among employee benefits firms] lags what has been aggressively taking place in the commercial insurance arena for over 10 years,” said White. Consolidation occurs in most industries to drive and leverage economies of scale, stepping up innovation through specialization. This is more difficult to execute within smaller firms with less scale and a smaller geographic footprint. In the past, this advantage has been more apparent in the P&C insurance space compared to employee benefits (e.g. life, health, medical, dental, disability, critical illness etc…).
However, a catch-up is taking place.
“We have a lot of employee benefits firms in the M&A pipeline, and I believe that [employee benefits] is going to be, particularly for the SME customers, a more integrated solution that’s going to line up beside commercial insurance, when in the past the two have been very separate,” predicts John Chippindale, vice chairman and Canadian chief marketing officer of HKMB Hub International.
“I believe this will be viewed from a practical standpoint as a new coverage that is very integrated into what these [commercial business] customers are looking for from one broker rather than two. We will experience [large P&C] insurers that are going to want to provide these coverages in competition with the likes of a Sunlife and a Manulife and an Industrial Alliance, and so on. I would see it as a natural, expanded part of the relationship and an extra line of insurance.”
However, for commercial brokers to get into the employee benefits space, brokers would need to prepare by cross-licensing, says Chippindale. They would need a license to sell life and health products, as well as a license to sell P&C products. However, not everyone in the brokerage would have to be cross-licensed to take advantage of the opportunity. “At the end of the day, I have an expert, and whether it’s an employee benefits expert, a D&O expert, a cyber expert, or a group personal lines expert, they are all specialists working together as a team,” said Chippindale.