Canadian Underwriter

What insurers want brokers to stop doing

November 30, 2020   by Adam Malik

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Brokers who take a broad, scattershot approach to getting submissions approved by underwriters are only setting themselves — and their clients — up for failure and disappointment, an insurance executive warned during a recent webinar.

For a better chance at success, try a smaller scope and a more targeted approach, recommended Andrew Steen, president of Berkley Canada.

Some brokers are taking a throw-it-against-the-wall-and-see-what-sticks tactic, Steen observed during the Insurance Institute of Ontario’s latest At the Forefront webinar series entitled Finding Your Success in Today’s Hard Commercial Market. “What I would encourage you to avoid in this market is broad-based, shot-gunning out [of] your submission activity on [behalf of] any individual customer.”

He gave an example of this happening a week before his talk. His team received a submission from a broker that was copied out to 16 other property underwriters in the market.

“Now, you may think, ‘Okay, this is awesome, I’m getting to all the players at once,'” Steen said. “But invert the situation for a minute and ask yourself: If you were an underwriter getting that email, how much attention would you want to dedicate to that, given that you have definitely sent it to people who are not in their appetite? The more targeted you can be with your submission activity, I think the more rewarding that that will go for you.”

Steen shared other advice to help brokers navigate today’s difficult times.

Andrew Steen, president of Berkley Canada, speaks during an Insurance Institute of Ontario webinar

For example, he encouraged all brokers to gain a better understanding of their insurer partners’ financial position.

“The reason why I say that is because those insurers that are wrestling with high combined ratios — so let’s say over 100 — are more likely to have to take dramatic action to improve their portfolios. And that will be a focal point for your customers that are with those markets. Therefore, you may see some more drastic actions coming your way on renewals.”

On the flip side, insurers performing at a higher level — he used the example of a combined ratio below 95% — “are more likely to be focused on the opportunities for you…to help solve customer problems, fill in capacity positions that are being evacuated, and so forth,” Steen said.

He also stressed the importance of relationships with markets. “And by relationships, I mean a deep understanding of which insurers are successful in which classes of business risk,” Steen said. “Because what that’s going to do, it’s going to help you point a customer to that solution providers in a really targeted way.”

His final piece of advice to brokers was to keep communication at the top of their mind. It’s already been discussed as important, but he emphasized that clients will need guidance not just for the rest of 2020, but well into 2021.

“What is the market going to look like [next year]?” he asked. “What can they expect? How can we help them set budgets and deal with this rising cost environment effectively?”


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17 Comments » for What insurers want brokers to stop doing
  1. Daniel says:

    Totally agree with all points raised in this article.

  2. Brijanand+Goberdhan+FCIP+ACII+DipInsTT says:

    With all due respect I’m not sure this is advice that brokers should rush to take. A broker’s primary duty is to ensure their client gets the best service and advice. Insurers need to be mindful of a dedicated professional, in this case: the broker, who looks to multiple options to obtain the right cover, at the right price. This gains the client’s trust and confidence and also serves a broker well if a matter ends up in court. Underwriter should not look negatively at a broker who searches out various markets and they should not be stereotyped as throwing it against a see what sticks. If anything, it should motivate an underwriter to work with the broker to win the business. I believe most brokers know which markets “do not apply” so by ignoring a broker’s submission, underwriters may just end up on that list.

    • Ideal world aside, carriers need to recognize their own hard market proclivities may be a prime contributor to brokers carpet bombing submissions.

      If individual risks (or segments) are being summarily dumped to market, directly through non-renewal or indirectly via pricing; if quote submissions are dying a slow and painful death on underwriters’ desks; or if risk appetite and price thresholds have become ‘flavour of the day’ – perhaps insurers should also look for some objective-supporting remedies, a little closer to home.

  3. Eric+Lapenis says:

    If insurers and MGA’s were more transparent about their target classes and classes in which they are successful this wouldn’t be as much of an issue. Instead of clearly defining their targets they often take a broad approach and this in turn leaves brokers with limited options but to use a shotgun approach.

    • Troy says:

      I agree. Markets need to be more transparent and communicate more frequently with brokers, with a goal to more effectively identify their target markets… maybe share their segment consent ratios, define their target market and refresh this type of communication more frequently.

      Also, smart brokers would “bcc” if using a shotgun approach to quote submitting.

    • Andrew Clark says:

      totally agree

  4. Rafik says:

    Isn’t it an E&O liability if a broker doesn’t shop the client sufficiently?

    • Eric+Lapenis says:

      Not an e&o at all. Consumers are not bound to deal with one broker just as brokers are not bound to deal with 1 insurer.

      • Rafik says:

        That’s interesting. I’ll have to look more into it.

      • Brijanand Goberdhan FCIP ACII DipInsTT says:

        With all respect, Eric/Lapenis, your absolute answer is subject to scenarios that have been tested, as in Fine Flowers case (Fine’s Flowers Ltd. v. General Accident Insurance Co. 1976.) In this case Justice Wilson of the Court of Appeal for Ontario opined: “If this requires him (the broker) to inform himself about his client’s business in order to assess the foreseeable risks and insure his client against them, then this he must do. It goes without saying that an agent who does not have the requisite skills to understand the nature of his client’s business and assess the risks that should not be insured against should not be offering this kind of service.” Justice Wilson was referring to situations where a client places their trust in and relies extensively on the broker to act accordingly. As such, assessing a client’s risk and seeking the right cover, wherever that may reasonably be available would speak to a broker’s duty. Further in Duraguard Fence Ltd v Badry, 2019 ABQB 783, the court said at “ [44] In essence, the broker’s duty is to assess the client’s risks, give advice and recommendations on appropriate coverages for each of the relevant risks and, after taking instructions, implement those coverages.” So not to belabour the point, I thinks brokers need more support from their markets given the very onerous and legal duties they bear. Perhaps the speaker could have also included what insurers could do to help brokers along this line.

        • Eric+Lapenis says:

          Nowhere in that does it say they have to blanket every available market. You’re hurting your clients by following this practice as your submissions will be ignored.

    • Eldon Gaw says:

      define “Sufficiently”…

      • Brijanand+Goberdhan+FCIP+ACII+DipInsTT says:

        As in “reasonably” which is for a court to decide whether the broker acted with due diligence and explored all reasonable potential options. My take on your comment. I hardly think when sued, a broker can refer to this speaker’s advice as a defence for not fulfilling their obligations to a client.

  5. Piero Tiseo says:

    Mr. Coyle I do believe that your expression of carpet bombing is so appropriate. It is the only approach that makes sense:
    a) Insurers, regardless of which, have the capacity to write just about everything. It depends a lot on whom the office/broker presenting the risk is: an owned one, a large volume one, Multinational broker and so forth not to mention the inconsistency and lack of knowledge of underwriters.
    b) We had a client underwritten by a very large insurer, due to premium and coverage consideration we had to move the account. The particular underwriter indicated that they would never write the account again! The following year, the client went shopping and guess who quoted. Upon calling the director for eastern Canada, I was told that an insurer can change their mind as they wish! What was unacceptable yesterday can be acceptable today!?
    c) Insures want us to forget what our role as brokers is. Those of us that believe in this business probably suffer from stomach aches with what we see going on in the markets place. And, everyone that can probably do anything about I asleep at the switch.
    We need brokers and consumers at the table with the government and IBC. The present situation reminds me of a Boeing employee that said this airplane ( insurance market) is designed by clowns ( take your choice; insurers, IBC, Government), who are in turn supervised by monkeys ( the governments and regulators)
    We are brokers which means we try to be referees: we know the rules of common sense and we see when these are transgressed and sacrificed to artificial intelligence, target rating, class of business, guidelines and so many more!
    This article was written by someone who is only reading and out of one book.

  6. Andrew Clark says:

    I think the problem lies on the insurance company side.

    Imagine an airline saying to expedia “Yaah, you know, why are you asking for so many different options? Make up your mind on exactly what you want, and then ask me once. Otherwise I’ll stop responding to you.”

    It is the insurance company’s fault for making the quoting process so difficult. If you could automate the quoting process on your end, you wouldn’t care how many submissions I send to you as it would zero marginal cost to quote.

    Get off your high horse and do something on your end rather than blame brokers.

  7. Jason Bednarz says:

    What a crazy world we live in when a company is saying “please send us less business”. Please figure out how to triage submissions properly and this problem goes away.

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