The latest “commercial market index” membership survey conducted by the U.S.-based Council of Insurance Agents & Brokers (CIAB) suggests that during the third quarter of this year there was a renewed sense of market competition among property and casualty insurers…
While the total value of the Canadian property and casualty insurance marketplace jumped by almost a third last year, the increased revenue benefits did not filter down to higher net earnings for the independent brokerage community, brokers say. In fact, independent brokers point out that they are not making money on personal lines business at all due to the rise in their operating costs brought on by the “hard market”. And, although market conditions are shaping up for improvement next year, brokers fear that a slow return of underwriting capacity combined with the overhead cost incurred from the past two years of lean running could spark a new wave of consolidation within their ranks. At the very least, the independent brokerage community will be facing a year of “belt tightening”, they say.
Dear Editor, Attached is a copy of a letter I sent to Rob Sampson MPP… To date there has been no response. When is the industry going to publicly explain their situation and counter all the bad press being given?…
With all the headaches experienced in the Canadian property and casualty insurance industry right now, not the least of which are struggling results from a volatile auto insurance product, it begs the question: “Why would any insurer want to do business here?” The Canadian industry brings many challenges – stressed financial results, strict capital requirements and a higher tax burden – sources say. These “three strikes” could add up to an “out” for global parents choosing whether or not to put precious capital into this market, they warn.
Brokers serving the bigger Canadian commercial risk pool outside of the mega international corporations say that rising insurance industry profitability has not softened the tough approach of insurers to pricing, terms and availability of coverage. But, with many commercial clients across the corporate earnings spectrum suffering through their third consecutive year of premium increases, there is acknowledgement by insurers of growing “market rate fatigue”, brokers add, which is bringing about a slow softening to the pricing of property risks with even a few new underwriters looking to venture into the broader commercial marketplace.
The insistence on errors and omissions (E&O) insurance for virtually any kind of professional exposure has created some waves in this specialty market, particularly for engineers. Poor results, increasing claims and emerging exposures are prompting insurers to aggressively seek rate adjustments, carefully monitor loss trends, and re-evaluate specific coverages for many lines of E&O. In some cases, such as in Alberta, the regulator is beginning to question whether the approach of insurers falls within accepted business boundaries or whether their actions fall under “tied selling”.
Taking over the presidency of the largest provincial independent brokerage association in the country shortly after what could be called a historic “landslide election” resulting in a new government for Ontario could be a daunting challenge for most people. That, however, is just the beginning of what may appear to the casual observer to be “overwhelming odds” as independent brokers continue to deal with the harsh realities of a “hard market” where insurance availability and pricing have become contentious political issues across Canada. For Doug Grahlman, who will take the helm of the Insurance Brokers Association of Ontario (IBAO) at the association’s annual convention to be held this month, the top priority on his agenda for the year ahead is “communication” – at both the government and consumer levels.
With the possibility of government run auto insurance systems being touted about by the governments of the Atlantic Canada provinces, for insurers operating in the region as well as the insured public, this current uncertain time is a period of trepidation. A decision driven by politics rather than practicality and the age old wisdom of competition could well result in the region’s drivers and taxpayers paying a hefty price over the long-run.
Waiting in the wings like nervous actors on opening night, risk managers are preparing for the upcoming insurance renewal season, unsure of the reception before them. Over recent years they have received a less than warm greeting from underwriters. But, recent surveys of the commercial insurance marketplace suggest that there may well be a “turning point” near – or at the least a “moderation” of the hard market which has dictated pricing for the last two years. However, CU’s annual roundup of Canadian risk management views indicates that the hard market is far from over, although its intensity has shifted from property to casualty/liability lines. And, in light of recent catastrophes from SARS to the “blackout of 2003”, the pressure from corporate boardrooms has increased on risk managers.
Responding to the amendment bill announced this week by the New Brunswick government to the province’s Insurance Act – which primarily presents insurers with an August 15 ultimatum to file for lower auto insurance rates or face immediate across-the board…
Although pricing of catastrophe covers began rising in the wake of the 9/11 terrorist attack, it is important to note that these rate increases only brought premium levels to a point last seen almost a decade ago. Should the Canadian insurance industry see a normal “cat burden” for 2003, then the combination of primary and reinsurance rate increases should be enough to allow reinsurers to see improved combined ratios at yearend. But, whether the market’s result will be good enough remains to be seen. Swiss Re’s annual cat study highlights the major factors likely to come into play in evaluating and pricing exposures.
Insurance costs are hammering Canada’s rapidly growing construction industry as rates go through the roof and capacity caves in. Builders are harder hit than many other commercial policyholders because underwriters are skittish about large-loss exposures. Many in the construction industry want rate relief and the return of stable markets.