November 20, 2019 by Adam Malik
Being a commercial broker in today’s environment is presenting unique challenges as some markets are feeling the effects of a difficult cycle more than others, says one broking leader.
The current market isn’t a hard one in a traditional sense, said Paul Croft, who was recently named a CIP Society’s National Leadership Award winner and is senior vice president and national broking leader with Aon in Halifax. He identified the current market cycle as “transitioning” since some pockets aren’t feeling the same effects as others.
“There are specific industries facing a really tough time in getting the insurance products at pricing they’re comfortable with,” Croft told Canadian Underwriter. “There’s definitely a market correction taking place.”
He specifically pointed to residential realty, recycling operations and seafood processing as being in a hard market cycle. “But I would say that doesn’t hold true for every industry class,” he noted.
While the business environment is more unpredictable now, there’s still some appetite and capacity in other sectors. “The market is evolving,” he added. “For the first time [since around 2003], we’re having to be a little bit more creative in how we approach the market.”
Brokers will continue to be challenged when it comes rates thanks to continued pressure, especially when it comes to commercial property. “I think we’re going to see a continued focus on writing risk that have good loss experience or have good risk control plans,” Croft explained. “And I think we’re going to see a continued focus on natural catastrophe and climate change and how that’s affecting consumers.”
Brokers looking for growth opportunities can find plenty in cyber coverage. “It has become pretty much a norm for most of our commercial clients to be looking at a cyber purchase or risk management around cyber liabilities,” Croft said.
There is room for broker improvement in this area. A recent poll commissioned by Insurance Bureau of Canada saw 65% of small and medium businesses report that their brokers haven’t spoken to them about cyber insurance. While acknowledging the diligent work of many brokers in educating their clients about these risks, Croft attributed the stat to a lack of familiarity around cyber threats.
“I think within the overall brokerage community, there’s still some work to be done and certainly people, generally, like to sell product around what they understand and feel comfortable with. I suspect there are still some brokers who have less of a comfort level around their understanding of cyber liability,” he said. “For the most part, in the mid to large commercial space, most brokers are doing a good job of informing their clients around the market and what’s going on to help clients gain an understanding of the exposure that they face. Not just what will shut down their operations but potentially interrupt their downstream business operations or affect their profitability.”