Two welcome commercial premium trends, post-pandemic

Gallagher in Canada is seeing some interesting premium trends in liability and commercial auto lines, now that pandemic restrictions are virtually non-existent. 

Businesses such as restaurants were shuttered or faced restrictions throughout the peak parts of the pandemic, meaning that exposures such as slip-and-fall and food poisoning incidents, for example, decreased dramatically. Exposures decreased similarly for auto, with fewer vehicles on the road and/or kilometres driven. 

“Now we’re starting to see that, as things reopen, those exposures are increasing. But the premiums are not increasing [proportionately],” Kevin Neiles, Gallagher’s president of western Canada and chief markets officer, said of the liability line. “It’s kind of a scenario where the premiums didn’t reduce perhaps the way one would have thought they could have. 

“We’re starting to see some level terms on renewal,” Neiles added earlier this month during a Gallagher Talks webinar, 2023 and Beyond: Canadian Market Projections. “So, there’s some good, good opportunity to really push for clients in personal liability.” 

Neiles was discussing Canada’s P&C market and trends in Gallagher’s lines of business with Dave Partington, CEO of Gallagher Global Brokerage–Canada.  

Gallagher places more than $2 billion of premium into the Canadian marketplace. “Our data is pretty robust around trends that are happening by line of coverage, and we’re looking now, really, at three years worth of quarterly trends,” Partington said. 

Kevin Neiles, Gallagher’s president of western Canada and chief markets officer, and Dave Partington, CEO of Gallagher Global Brokerage – Canada, during a Gallagher Talks webinar.

On the commercial auto market side, “this is really where things are starting to pick up in a big way,” Neiles said. “And I think the exposure again is being offset by the fact that rates were not decreased as significantly as one would expect during the pandemic.” 

But while the median is high single-digit increases, sometimes Gallagher is seeing level or reduced rates for best-in-class risks. “Where you have a client with a commercial fleet [and] they’re willing to put into play different risk management tools that can help them, we’re definitely able to find good terms, strong terms for them,” Neiles said. 

Added Partington: “For the best 25% of risk, we are seeing a 2% reduction in premiums.” 

Neiles and Partington discussed other lines of Gallagher’s business including standalone property, ‘commercial package’ (which covers a number of lines of business), umbrella liability, cyber and D&O.  

For D&O, although there was a “real hardening” of the market about eight months ago due to fears revolving around publicly traded companies and class-action lawsuits, premium increases appear to have softened. 

“[Those fears] chased a lot of players out of the market, and really made the terms, premiums and deductibles challenging for clients,” Neiles said. “Things seem to have settled down a little bit in the marketplace. There’s a bit more comfort, so more of those players are coming back and there are a few new entrants. 

“This is a situation where increased competition in the marketplace is helping. We’re still seeing rate increases again. But I think on the best-of-businesses, we’re seeing low single-digit increases. And we have actually seen some decreases, but often those decreases in premium come with differences in terms of high deductibles, those sorts of things.” 

In general terms, Canada’s P&C insurance market remains vibrant but unpredictable, although there are signs of stabilization, Neiles said. The unpredictability is related to a variety of push-and-pull factors associated with underwriting profits, reinsurance rates, interest rates, claims inflation, labour challenges, and catastrophes. 

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