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As pressure mounts to address rising rates during the pandemic, insurers pledge to help small businesses

A group representing Canadian insurance companies is launching a team to help small businesses find affordable coverage as rates rise because of the COVID-19 pandemic. The Insurance Bureau of Canada (IBC) said the team will start its work by focusing on helping the hard-hit hospitality sector in Ontario by evaluating the needs of businesses and finding them appropriate coverage.

The move comes after business owners and politicians in Ontario raised concerns over increasing instances of sky-rocketing commercial insurance rates and outright denial of coverage in some cases.

“We have a shared interest in making sure that as many small hospitality businesses as possible in Ontario can find the insurance they need – even in a time of heightened uncertainty and risk,” said Don Forgeron, CEO of IBC, who acknowledged the frustration small business owners are facing.

If you work in the hospitality sector and want to find out more, speak with your broker or agent.

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What brokers want from their carriers during the pandemic

As COVID-19 changes the world, brokers need carriers that will change along with it. For brokers, successful carriers during and beyond the global pandemic will be the ones excelling at the three ‘As’ — accessibility, agility and authority (underwriting).

And while this has always been the case, the crisis situation brought about by the global pandemic has shone a bright light on which carriers are excelling at these underwriting fundamentals, says Garth Pepper, President of Liberty Mutual Canada.


During the onset of the pandemic, the key message that was being prioritized to CEOs of the country’s major insurer carriers was: “We need you to be open for business.” The intention was that they sought confirmation that his markets would be accessible while the country’s economic meltdown buffeted Canada’s commercial clients.


As clients were going through a significant economic shock, they are leaning on their brokers for support. The second message was “You are going to have to figure out how you reflect these reduced exposures, because clients are asking us for it and need it.”

These businesses were calling brokerages throughout the country for relief. They wanted to know what their markets’ game plan was to help commercial clients.

Underwriting Authority

When servicing a client that has unique insurance needs, nothing is more frustrating to a commercial broker than getting an automated message saying the risk can’t be written, citing strict adherence to unyielding underwriting rules or obscure internal guidelines, policies and procedures. Or perhaps a locally-based underwriter can offer a flexible solution, only to have a corporate head office in another country scuttle the deal. For a broker who wants a chance to work through the issue with someone, it’s the worst-case scenario: Underwriters with no authority to be creative problem-solvers.

Brokers and clients are going to have an increased need for companies to provide solutions on a multiple product line basis, and in multiple jurisdictions. That will be more important as well.”

Ultimately, says Shields, echoing Pepper, the pandemic is an opportunity to differentiate between commercial carriers. “I’m hoping that clients and brokers will be able to step back and see who was able to come to the table and respond,” she says.

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Insurer working on future pandemic coverage for school boards, post-COVID

As the Ontario government unveils its school re-opening plan, the insurer for the majority of the province’s boards is working on a plan to provide pandemic coverage, albeit for future pandemics and not for COVID-19.

Within the next six to eight months, the Ontario School Boards’ Insurance Exchange (OSBIE) “may have a product that provides more specific coverage to school boards in the event of a pandemic,” said Jim Sami, CEO of Guelph-based OSBIE, in an interview this past Friday. “This would not provide coverage related to COVID-19 but will provide both first party and third-party coverage relating to future pandemics.”

At the moment, if a school insured by OSBIE is sued by a third party, and the pleadings allege there was COVID-19 transmission, OSBIE would have no automatic duty to defend unless it also alleges that the school board was in some way negligent, said Sami.

Generally, insurance is intended to cover sudden and unforeseen risk, rather than an event with a high probability of happening. OSBIE insures about 90% of school boards in Ontario, and that includes liability coverage. School boards can either buy insurance from OSBIE or from a different insurer.

“How schools manage the risk of disease transmission depends on how the Ministry of Education proceeds with re-opening. They are looking for various scenarios and each one would have specific risks that need to be addressed. For example, full opening, partial opening, virtual opening or hybrid.”


Governments increase support for eligible farmers experiencing labour challenges during COVID-19

The governments of Canada and Ontario are providing the best support possible to help farmers by enhancing AgriInsurance coverage for the 2020 growing season to include managing challenges and labour shortages due to COVID-19.

Ontario’s agriculture industry, specifically farms growing fruits and vegetables such as tomatoes, melons and peaches, are labour intensive and highly dependent on seasonal agricultural workers. During the pandemic, there has been interrupted regular flows of worker travel and has resulted in some gaps in labour availability, which may result in some crops being unharvested and financial loss for the agri-food industry.

The federal government made a commitment on May 5th to work with the provinces and territories to explore possibilities for expanding the AgriInsurance program to include labour shortages as an eligible risk for the horticulture sector. Of note, Ontario is home to 49,600 farms, growing 200 different commodities. Ontario’s agriculture industry supports 69,000 jobs and contributes $7.6 billion to the GDP.

Ontario farmers already enrolled in an eligible production insurance plan who suffer from crop losses due to labour disruptions during the 2020 growing season will have access to further insurance coverage. The added insurance coverage will include:

  • Inability to attract sufficient on-farm labour due to COVID-19; and
  • Illness or quarantine of on-farm labour and the producer due to COVID-19.

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Canadians do not know how to find virtual care

COVID-19 has been responsible for a negative impact on mental and physical health  of 60% of Canadians, according to a recent Lumino Health survey. Still, only a small percentage of Canadians are seeking treatment. Of respondents who said COVID-19 is negatively affecting their mental health, only 21% have sought professional care. This rate is consistent with Canadians who say the pandemic is having a negative impact on their physical health, with only 21% seeking professional help.

The need for Canadians to connect virtually with health care professionals has never been more important, but over half of all Canadians said they do not know how to find virtual care services. The awareness however, is high (72%). When asked what they believe are the main benefits of virtual care, Canadians listed:

  • convenience (54%);
  • no waiting rooms (50%); and
  • speed to connect with a health-care professional (40%).


Autonomous vehicles wouldn´t prevent all crashes in the near future

The focus of ongoing research about autonomous vehicles has been on whether they will be able to make roads completely safe.

A new study from the Insurance Institute for Highway Safety says that while autonomous vehicle technology has great promise to reduce crashes, it might prevent only around a third of all crashes if automated systems drive too much like people.

The group says that while self-driving vehicles eventually will identify hazards and react faster than humans, they won’t become distracted or drive impaired, but stopping the rest of the crashes will be a lot harder.

Crashes due to only sensing and perceiving errors accounted for 24 percent of the total, and incapacitation accounted for 10 percent. Those crashes might be avoided if all vehicles on the road were self-driving, though it would require sensors that worked perfectly and systems that never malfunctioned. The remaining two-thirds might still occur unless autonomous vehicles are also specifically programmed to avoid other types of predicting, decision-making and performance errors.

Alexandra Mueller, a research scientist at the IIHS said that their analysis shows that it will be crucial for designers to prioritize safety over rider preferences if autonomous vehicles are to live up to their promise to be safer than human drivers.


Insurance considerations for manufacturers pivoting to personal-protective-equipment production

The COVID-19 has moved the course of everything, including Canadian businesses. Canada Goose, Bombardier Inc, Ontario Power Generation, the Labbatt Brewing Company, are some of the manufacturing firms that have joined the list to pivot their operations to non-traditional production amid the COVID-19 pandemic.

Lawyers have suggested manufacturers restructuring their business operations and pivoting to the production of PPE or medical equipment, should reach out to their brokers in advance of making any changes in order to ensure they’re adequately protected.

“They might be bringing larger volumes of chemicals and/or brand-new chemicals and resins onto their sites. A lot of them are going to be switching into industries that involve a lot of plastic, whether that’s in handling, fabricating or production, which could pose new risks. These are all things that may not have been conceived of or contemplated in their initial risk management strategy.” told Karim Jaroudi, environmental specialist at Burns & Wilcox Canada.

Another thing for manufacturers to consider from an environmental exposure standpoint – which many probably aren’t because of the fast-evolving nature of the COVID-19 pandemic – is what happens when things eventually get back to normal. Is it safe to convert your plant back to its original use? Are you still storing different chemicals or hazardous materials? How has your environmental exposure changed since you made the switch? Are you going to switch back or do you plan to keep producing PPE?

“I think we cross that bridge when we get to it,” Jaroudi commented. “There is absolutely an underwriting endeavour to be had there. Brokers will have to work closely with their manufacturing clients to understand their way back and what is being done to facilitate that.”


Majority of Fort Vermilion residents affected by flooding lack insurance.

The community of Fort Vermilion, Alberta, was evacuated on April 26 when the nearby Peace River overflowed due to an ice jam. About 750 people were forced to flee from their properties.

Over 150 structures in Fort Vermilion were damaged by the disaster, and to complicate matters, the majority of Fort Vermilion residents do not have flood insurance. Even though the community is on a known flood plain, insurance is too expensive for many.

In an advisory published shortly after the northern Alberta flooding, the Insurance Bureau of Canada offered a reminder to homeowners in the area that overland flood insurance is an optional add-on to regular homeowners’ and/or business insurance.

Fort Vermilion is expected to receive about $47 million of the funding allocated for northern Alberta communities affected by flooding.


How does the insurance industry sell their way through The Next Great Recession?

At the beginning of the COVID-19 pandemic, financial analysts predicted the Canadian Property & Casualty industry would be able to manage through the crisis in the short term. But in the medium- to long-term, they warned, the industry’s financial situation would get more difficult.

The Canadian economy will re-open in fits and starts while we wait for the vaccine to be developed. This new economic reality will make insurance a tough sell over the next year or two.

But not everything is lost. What do GE, Disney, HP and Microsoft have in common? They were all startups during steep declines in the U.S. economy. Entrepreneurial insurance companies and brokers should seek opportunities in those sectors of the Canadian economy that they expect to start up, bounce back quickly, or even thrive after the business lockdowns. In short, the secret to selling during this crisis may involve identifying pandemic-proof economic sectors that can generate at least some premium growth while the virus runs its course through the Canadian economy.


Is insurance a commodity?

The commoditization (or commercialization) of products means consumers are no longer distinguishing differences in brands, regardless of who made them.

Given the product variations and efforts on market and service differentiation, it isn’t easy to define insurance products as commodities. However, carriers have freedom in their ratings, market experiences, and services to truly differentiate (or distinguish themselves) from others.

Certain insurers often struggle to differentiate their products, given that industry regulators and market conditions force them to offer similar coverages and definitions.

By designing intuitive products, adding risk appetite options to the buying process, and using online platforms to support self-education and product awareness, insurers could design digital offerings that ensure clients purchase the right insurance.

Another option to consider is the Hybrid digital model, which would help guide user experiences and educate customers, while engaging advisors to ensure purchasing success.

To find out how this may affect your coverage, contact your insurance agent or broker.