As COVID-19 changes the world, brokers need carriers that will change along with it.
For brokers, successful carriers during and beyond the global pandemic will be the ones excelling at the three ‘As’ — accessibility, agility and authority (underwriting).
And while this has always been the case, the crisis situation brought about by the global pandemic has shone a bright light on which carriers are excelling at these underwriting fundamentals, says Garth Pepper, President of Liberty Mutual Canada.
“This is a huge time to differentiate,” Pepper told Canadian Underwriter recently, when talking about what brokers want to see from their carriers during the pandemic. “Brokers moving forward will certainly continue to expect high levels of service from their insurers, as they should. But it will certainly be correlated to how each insurer operated within this current [pandemic] environment.”
In times of crisis, brokers are looking for markets that are mastering the fundamentals, Pepper says. “Were their carriers accessible and available? Were the underwriters empowered? Were they giving a high level of service, or did they struggle with that in this current environment? Also, did the carrier show appropriate compassion, in terms of understanding some of the pressures that brokers and their clients are dealing with? I think that’s a big element as well.”
On Mar. 16, 2020, Shawn DeSantis, President and CEO of Navacord Corp., and T. Marshall Sadd, Executive Chairman of Navacord Corp., were leading the response of their national Canadian brokerage to the global COVID-19 pandemic. In doing so, they sent out an email to CEOs of the country’s major insurer carriers.
At that time, the Canadian P&C industry and its commercial clients were under a state of emergency. The World Health Organization had just declared COVID-19 to be a global pandemic. The federal and provincial governments were halting travel and starting to order non-essential businesses to shut down to prevent the spread of the virus, which has, at the time of writing, killed more than 8,700 Canadians and infected more than 106,000.
DeSantis says the intention of his brokerage’s email was to deliver several key messages to the heads of Canadian P&C carriers. Among them, he sought confirmation that his markets would be accessible while the country’s economic meltdown buffeted Canada’s commercial clients.
In the email, DeSantis tells Canadian Underwriter, the priority message to CEOs was: “We need you to be open for business.”
“In that first week,” DeSantis elaborates, “it was clear that some companies were better positioned than others. I get it that it was the first week [of the pandemic] and there was a lot of transition, but the message [from us to the CEOs] was: “Clients are still calling us regardless of what’s happening around us. We need to be able to pick up our phone and get in touch with an underwriter. That was Message Number 1.”
Better communication between brokers and underwriters has become part of a broad spirit of cooperation that has ‘Zoomed’ throughout the industry lately, DeSantis observes.
“I think the carriers that are leading — and that will continue to lead — through this [pandemic] are going to be the ones who communicate the best with their broker channel,” he says. “I feel fortunate through this process to have had communications with senior executives of insurance companies on a frequent basis, and our account executives would say the exact same about the underwriters who are available. The idea that we can get [an underwriter] on Zoom and have a discussion about a risk face-to-face, instead of swapping five or six emails back and forth, it makes things in our industry move faster. There is more transparency, and I think that’s a big takeaway for our industry.”
Message Number 2 to the CEOs emphasized the need for agility.
Government emergency orders placed Canadian businesses under enormous financial strain. Statistics from the Canadian Federation of Independent Business (CFIB) suggest that 80% of Canadian small and medium-sized businesses suffered either a partial or full shutdown as a result of social distancing rules.
A separate study of Canadian small and medium-sized businesses conducted in April by the CFIB showed that 40% of the businesses reported revenue losses of higher than 70% as a result of government-ordered business shutdowns. In late May, 12% of more than 4,400 Canadian businesses surveyed by CFIB agreed with the statement: “I am considering bankruptcy/winding down my business as a result of COVID-19.”
These businesses were calling brokerages throughout the country for relief. And DeSantis wanted to know what his markets’ game plan was to help his commercial clients.
“Clients were going through a significant economic shock,’” DeSantis recounts. “And we are their support — their broker. Our clients were calling us and saying, ‘I’m parking vehicles. My construction project has slowed down. My restaurant is closed down. I need to reflect my reduced exposures.’
“So, the second message we sent to the companies was, ‘You are going to have to figure out how you reflect these reduced exposures, because clients are asking us for it and need it.’”
Taylor Shields is Head of Distribution at Liberty Mutual Canada, an insurer that distributes commercial and specialty lines insurance with offices in Montreal, Toronto, Calgary, Edmonton and Vancouver. She says Liberty pivoted quickly to account for entire changes in some clients’ manufacturing process. In some instances, clients were re-tooling their entire business to manufacture things such as personal protective equipment or hand sanitizers, in an effort to help front-line hospital workers treat spikes in COVID infections. Liberty was called upon to support these clients with innovative insurance solutions.
“With the amount of pressure exerted on mutual clients [to change products and adjust coverages to reflect risk], brokers are trying to find solutions for them quickly,” says Shields. “They need to be working with a market that has local authority; that has an empowered team; and that has a lot of expertise within a particular industry segment, so that they can provide a customized and tailored solution to those clients.”
When servicing a client that has unique insurance needs, nothing is more frustrating to a commercial broker than getting an automated message saying the risk can’t be written, citing strict adherence to unyielding underwriting rules or obscure internal guidelines, policies and procedures. Or perhaps a locally-based underwriter can offer a flexible solution, only to have a corporate head office in another country scuttle the deal. For a broker who wants a chance to work through the issue with someone, it’s the worst-case scenario: Underwriters with no authority to be creative problem-solvers.
“In an environment like this, our clients and mutual brokers need underwriters who are accessible, underwriters who are empowered to make decisions, and underwriters that are solution-oriented,” says Pepper. “They need to be agile, and they need to execute in a way that is consistent with our corporate messaging, goals and aspirations. This all assumes a higher priority, even though all of this is required during more normal times.”
Shields notes that brokers are looking for experienced underwriters to think outside of the box and identify a need for products in response to emerging trends. “It will really be important for brokers to have insurer partners that look into the future; they want insurer partners that can see the emerging trends and new product needs of clients, and that have the capacity and ability to offer new solutions and products for those customers.”
The pandemic is highlighting new mobility needs around the shared economy, ride-sharing and home-delivery services, as Pepper observes. “The movement of goods is going to increase,” he says. “There will be different product needs and solutions for that. Brokers and clients are going to have an increased need for companies to provide solutions on a multiple product line basis, and in multiple jurisdictions. That will be more important as well.”
As businesses across Canada begin to re-open in the middle of a pandemic, “re-thinking liability is an interesting topic,” says Shields. “With large gatherings of individuals, where there might be a chance of contracting something like this virus, what are the liability exposures and what are some of the controls? Are brokers prepared to counsel their clients? And how can companies step up to be able to help educate around some of the differences in liability that might come up?”
Ultimately, says Shields, echoing Pepper, the pandemic is an opportunity to differentiate between commercial carriers. “I’m hoping that clients and brokers will be able to step back and see who was able to come to the table and respond,” she says.