What COVID-19 tells us about buying commercial insurance direct
April 21, 2020 by Greg Meckbach
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Commercial clients can buy insurance online if they want, but the COVID-19 pandemic is showing the importance of having a broker to help out, suggests Darren Rodrigues, the new president of the Insurance Brokers of Toronto Region (IBTR).
“In a way, COVID has enlightened some people, because you can now buy commercial policies online – or at least get the quote for it – similar to personal lines,” Rodrigues said Tuesday in an interview. “But as is the case with personal lines, you don’t know what you are buying. You are assuming that everything is there, but you don’t know what you are buying because there is no professional – being the broker – who is explaining the coverage in and out, what’s covered and not covered.”
Rodrigues was elected president of IBTR this past February. Canadian Underwriter asked him about the impact of the pandemic on Toronto area brokers.
The vast majority – 80% to 90% – of brokers are working from home or remotely, Rodrigues estimates.
“A lot of dialogue is taking place now, and [clients] get to do that with their brokers because they can’t call directly to the insurance company. But if they buy it online, they have no professional to talk to.”
Commercial brokers are fielding a lot of calls from clients asking why business interruption is not covered during a pandemic, reported Rodrigues, who is also director of commercial lines at BrokerLink’s office in Woodbridge, immediately north of Toronto.
Although not every BI policy is worded the same way, it generally requires damage to the property itself to trigger coverage.
As Rodrigues explains: “An example is that a fire burns your store down. You can’t operate your store because the store was destroyed. The insurance company is going to come in, they are going to rebuild your store. But in the meantime, you are out of business. They are going to pay for loss of income while you are out.”
The challenge for commercial brokers during the pandemic is explaining this to some clients.
“It’s a tough battle from broker’s perspective, because we are supposed to be on the side of the client. We are also supposed to support our insurance partners. So we are kind of caught in the middle in between trying to help [the clients], knowing it’s potentially kind of a lost cause, but still trying to do the fight.”
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This is not a good argument. The vast majority of commercial policies are sold by brokers, and none are covering BI for pandemic, except perhaps a manuscript wording for the largest insureds and interruption exposures. The idea that the reason insureds aren’t covered is that they got their insurance direct, is flawed. There are a lot of good reasons to use a commercial broker, this isn’t one of them. If brokers are going to stay relevant they need well reasoned and compelling arguments that clearly show their value. People’s confidence in insurance has never been lower as companies with BI cover are going under en masse because of a business interruption. The insurance industry has a lot of work to do to rebuild consumer confidence.