February 4, 2019 by David Gambrill
Whether the industry faces a hard market or simply a “market correction,” commercial lines premiums are definitely on the rise, Canadian commercial brokers reported in an online poll by Canadian Underwriter. And they are starting to get concerned about it.
Commercial brokers may want to adapt their business renewal strategies accordingly, suggests a new white paper from Signature Risk Partners Inc..
Ninety-one percent of commercial brokers surveyed by Canadian Underwriter reported seeing price increases in Canadian commercial property lines. In commercial auto lines, 72% of brokers surveyed reported seeing higher prices.
Canadian Underwriter conducted an online poll of 132 personal and commercial lines brokers in late January. Thirty-four brokers in the survey identified themselves as purely commercial brokers, while 45 identified as doing commercial work within full service brokerages. The rest were exclusively personal lines brokers.
Considering just the commercial brokers surveyed, respondents were asked to rate the impact of the price increases on their clients. Fifty-nine percent of commercial brokers said higher prices in commercial property lines has had “some” impact on their clients. A further 26% described the impact as “large.”
Commercial brokers reported similar percentages regarding the impact of higher pricing in commercial auto lines — 59% reported “some” impact on clients, while 23% said the impact was “large.”
Are commercial brokers concerned about the higher prices in Canada?
“Somewhat,” the survey results show. In contrast, a majority of personal lines brokers said they were “extremely concerned” about price increases in personal property and auto lines.
Asked to rate their level of concern about commercial property lines increases, most (42%) of the commercial brokers in the study said they were “somewhat” concerned. Overall, 23% said they were either “extremely concerned” (17%) or between somewhat and extremely concerned (6%). Only 4.5% reported being “not very” concerned.
The level of concern was marginally higher regarding increases in commercial auto lines. The largest category (32%) of commercial brokers were “somewhat” concerned about commercial auto rate increases. That number is about 10% lower than the ranking expressed for commercial property lines increases. The bulk of the 10% difference translated into an elevated concern about commercial auto rate increases: 20% of respondents ranked themselves as “extremely concerned,” with a further 12% being somewhere between extremely and somewhat concerned.
For commercial brokers concerned about the firming market, how can they help their clients at renewal, and make sure they get the best rates?
Give yourselves more lead time to renew your client’s business, says a new white paper by Signature Risk Partners.
The paper paraphrases James Grant, president and CEO at Signature Risk Partners, advising that the first step is to “reach out to insurers early to see if there are going to be any changes to the client’s terms.”
Jeff Kislasko, national programs underwriting manager at Allianz Global Corporate & Specialty (AGCS), agrees with Grant. He adds that the days of brokers reaching out to insurers a week or two before an insured’s term is set to renew are over.
“I see it so often,” Kislasko is quoted as saying. “They’re looking at accounts that renew in a week, and basically they have no solution.”
He suggests starting the process 60 to 90 days in advance. “The capacity is out there,” he says, which also explains why some brokers describe this as a market correction rather than a hard market. “It’s just a matter of brokers getting ahead of it, and making sure they’ve got a detailed submission.”