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Are your commercial clients budgeting for a hard market?

Since Canadian Underwriter first raised the issue of commercial insurance rate increases at the Top Broker Summit last November, experts in the field have been giving their views on the main challenges ahead for the industry.

Albert Benmichol, the CEO of Axis Capital Holdings Ltd., expects the hard market to persist. During an earnings call this past July he stated that “even with the increases that we have seen in the last two years, many lines of business are still not at acceptable pricing.”

At the Top Broker Summit, panelists were asked when they believe the hard market will end. Carol Jardine, president of Canadian property and casualty operations at Wawanesa Mutual Insurance Company, responded “unfortunately for customers I think it’s got a long run.”

Experts agree that the key to success in 2020 will be discussing and understanding the client’s perspective, while still getting the rate they need for their shareholders.


Cyber leads global business risks for the first time

In the digital era, corporate data has become a key competitive asset. As a result, cybersecurity threats pose new global business risks.

For the first time ever, the Allianz Global Corporate & Specialty annual survey on global business risks ranked cyber incidents as the most important business risk in the world. Business interruption and changes in legislation and regulation ranked second and third, respectively.

Seven years ago, cyber ranked 15th with just 6% of responses, but today cyber incidents have become a major expense for businesses, resulting in costly lawsuits and litigation.

Climate change has also risen to its highest-ever position on the Allianz Risk Barometer. This is the result of concerns about increasing physical losses caused by rising seas, droughts, storms and flooding. 



Why you shouldn’t go outside the industry to find talent

There are many reasons to look for talent within your own organization before looking externally,  according to Tomas Chamorro-Prezmuzic, the chief talent scientist at ManpowerGroup, and Jonathan Kirschner, CEO of AIIR Consulting. In their blog for Harvard Business Review, According to Chamorro-Prezmuzic and Kirschner, internal hires adapt quicker because they are better able to understand the culture and politics of the organization. They are also more likely to be loyal and committed to their company, resulting in a lower staff turnover.

Chamorro-Prezmuzic and Kirschner also provide several science-based recommendations to help organizations update their hiring techniques. These recommendations include thinking ahead, focusing on the right traits for the role, and thinking inclusively. According to the authors, “the most important part of this process is to never stop thinking about your employees’ potential and talent,” which they consider key to creating a high-performing team.


Which technologies bring the most value to the industry supply chain?

Process automation, artificial intelligence, and blockchain innovations are making insurance processes more efficient. They are also making  insurance more affordable and accessible.

Insurance technology is a growing field, and we will see certain technologies rising over the years. Insurance companies are expanding their data sources to include social media and satellite imagery. We will also see more transparency around risk on personal lines and supply chain insurance thanks to distributed ledger technology.

There are two notable advancements on the blockchain front. The first is a pilot project that simplifies complicated insurance policies. The second is the marine industry’s decision to adopt Insurwave, a blockchain platform, to support marine hull insurance.

Despite these advances, there are still some roadblocks hindering the widespread adoption of insurtech. These include the sheer volume of companies, their capabilities, and the unique value-adds that they’re toting.


Biggest insurance losses in 2019

Last year, insured damage from severe weather events reached $1.3 billion. According to the Insurance Bureau of Canada, no single event in 2019 caused the high amount paid out for losses. Instead, they claim that the high-cost losses are a result of several smaller severe weather events across Canada rather than one devastating weather event.

In October 2019, a Halloween storm caused severe wind and water damage across Ontario and Quebec. At $250 million, it was the most costly weather event for insurers. The storm hit the Niagara region and Montreal hardest, and these areas suffered the most damage.

Flooding in Quebec and New Brunswick in April and May of 2019 was the second-most costly weather event, resulting in $208 million in insured damage. The flooding was caused by high water levels from snowmelt and rain on the Ottawa and Saint John rivers.

The hail storms that hit Western Canada in July and August were the third costliest weather event of 2019, costing $181 million.



IBC reveals list of most frequently stolen vehicles in Canada

Auto theft continues to be an issue in Canada with car thieves becoming more technologically capable than ever before. According to the Insurance Bureau of Canada’s annual list of most frequently stolen vehicles, car thieves now rely on technology to bypass vehicle security systems. The increasing amount of vehicles with keyless entry fobs has increased electronic auto theft, as thieves are able to evade these security systems.

According to this year’s list of the top 10 most stolen vehicles in Canada, Ford trucks with a pre-2007 model year make up the majority of the list. These vehicles do not have ignition immobilizers, which prevent hotwiring. The Insurance Bureau of Canada also states in its report that auto theft costs Canadians approximately $1 billion each year, which includes the $542 million that insurers pay to fix or replace stolen vehicles.

For further information on how your vehicles ranks, contact your insurance representatives.


Driver assist technology: is it really just another distraction?

Vehicle assist technology may actually be contributing to distracted driving but it may just be a short-term trend. Desjardins insurance conducted a national survey and found that 63% of respondents feel that vehicle safety technology can contribute to distracted driving and over 80% of respondents believe that more education is needed on how to use new safety features.

The potential for increased collisions as a result of vehicle assist technology will directly impact insurance providers. Since new safety features like the rear-view camera are no longer reserved for high-end vehicles, safety technologies are linked to increasing claims costs and car repair costs for insurance companies.

Desjardins claims that with improved driver assist technology in cars, people are having too much confidence in safety features and becoming less aware of their surroundings. According to the Vice President of claims at Desjardins, it is difficult to evaluate the exact number of collisions due to vehicle assist technology but insurance providers should be aware of this concern.


How a lack of communication with other sectors is hurting insurance

When change hits other industries, property and casualty insurance leaders need to be included in the process to consider the impact such changes would have on insurance and to prepare for new trends to emerge. The lack of communication between sectors has remained a challenge for insurance companies, as it reduces the ability for insurers to plan and prepare for upcoming trends and the ripple effects they may have.

A prime example of this issue is how the lack of communication between car manufacturers and insurance companies has been hurting automobile insurance providers. The constant development of new electronic features in cars has increased the costs associated with fixing vehicle damages for insurance companies. For this reason, insurers would have benefited from the opportunity to plan and prepare for the impact that new vehicle technology would have on them.

In an effort to fix this issue, senior insurance brokers are talking to senior executives in other industries to gain insight on future trends that may emerge and have an impact on the insurance industry.


Why thousands of unsafe commercial vehicles remain on Ontario roads

According to the 2019 Annual Report of the Auditor General of Ontario, the ministry has not inspected more than half of Ontario’s commercial vehicle carriers in the past two years and the number of vehicles inspected each year has decreased significantly.

The Auditor General recommends the Ministry of Transportation create a province-wide staffing plan to hire more enforcement officers and that enforcement officers are being regularly reviewed on productivity targets to increase roadside inspections. It is also recommended that random drug and alcohol testing is enforced for commercial vehicle drivers to reduce the risk of collisions involving impaired driving.

Based on the report’s findings, the Ministry of Transportation has agreed with the Auditor General’s recommendation to increase roadside inspections and reduce impaired driving involving commercial vehicle drivers.


A simple solution to the insurance “talent gap” equation

Today, insurance organizations are worried about the “talent shortage” in the industry as they struggle to attract new talent to fill positions as insurance veterans reach retirement age. Insurance companies need to work on making the industry appealing to the new generation of professionals.

KASE Insurance, a leading commercial insurance broker in Ontario, has avoided this issue altogether. The insurance company has grown exponentially since it was founded three years ago and the founders attribute this to their hiring process.

They believe the key is hiring people that are equally as excited about the insurance industry as they are, while also making sure their new hires are super ambitious with fresh ideas. How have they achieved this? By putting entrepreneurial spirit at the core of their recruitment strategy. Stanislav Kokojin, one the founders says that they’ve never had an issue finding talent:

“There are lots of millennials who want to make a difference and have cool ideas for projects that they’d like to implement, but too often they’re told there’s no budget or appetite for that idea. We’re looking for entrepreneurial people who strive to be the best, and we’ve been very successful in finding that talent.”

KASE is determined to break down the barriers that keep young professionals from getting a head start in the insurance industry. Their training process teaches young brokers to become excellent commercial advisors and there’s room for change in the status quo.