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DECLARATIONS
SURVEY SAYS...
BROKERS’ BIGGEST CHALLENGES
Ninety-five brokers picked their “Top 3 most important challenges” from a list of 23 major issues facing brokers today. The votes below indicate how many times the issue appeared in their Top 3 lists.
1 Retention of clients in hardening market conditions 2 Recruiting top talent into my brokerage
3 Improving data exchange with carriers
4 Finding profitable business in hardening market conditions 5 Competing for business against directs
60 Votes
(63.2%)
36 Votes
(37.9%)
28 Votes
(29.5%)
26 Votes
(27.4%)
21Votes
(22.1%)
If a pre-existing relationship ex- ists, and that underwriter comes to you with terms, you know he’s got an interest in you, Cosette suggests. You know he wants to renew at a reason- able price.
“I strongly believe that if you’ve been with someone for 10 years, they’ll be kind of more lenient during a hard time,” he says. “But if last year I changed underwriters for just a couple of cents, trust me, that new guy owes me nothing. Don’t go into the market and try to get every last cent out of ev- ery underwriter you meet and change relationships overnight.”
How can you help an underwriter to help you in a hard market? Provide enough detailed information to enable the underwriter to write a rate that’s palatable to you, says Cossette, who be- gan his career as an underwriter, then a broker and then a risk manager.
“Underwriters want to write ac- counts,” he adds. “People don’t get this.” Insurers’ appetite parameters tend to tighten up dramatically in a hard mar- ket, so being able to distinguish your or- ganization as best-in-class is extremely important, says Curtis Desiatnyk, man- ager of risk and insurance with Mount
Royal University in Calgary.
“If you’re simply filling in applica-
tions, you may not always know what information is really driving their deci- sions or rates,” he says. “Being able to have one-on-one conversations to make your case and answer their direct ques- tions can make all the difference.”
Cossette and Desiatynk each report seeing pressure on rates. “I don’t think an underwriter wants to double the pre- mium,” Cossette says, noting that he has seen rate increases of between 10-15%. “What they want is a good substantial increase. But mostly they want the un- derwriting information that will justify their position on any given account.”
HARD PREDICTION | JULY 31 Commercial clients hoping for some relief from price increases could be in for a disappointment, Albert Benmichol, CEO of Axis Capital Holdings Ltd., said during an earnings call. “We believe that [upward] pricing action will continue into 2020 and perhaps longer.”
Many people believe a hardening mar- ket is strictly about rates. “It’s not,” says Cossette. “It includes restricted capacity and a pressure on rates, but it’s mostly about a request for tangible information for the underwriter to assess the risk.”
In a soft market, underwriters can write accounts with less information. However, if the risk manager didn’t provide enough detailed information during the soft market, and suddenly
the underwriter is asking for addi- tional information during a hard
market cycle, it can put the unprepared risk manager in a tough position.
“If you did your job as a risk manager and you do have this information, there will remain some pressure on the rates, but if you have a relationship for a long time going with a serious partner, I don’t see any problem and I haven’t,” Cos- sette says. “I’ve seen increases, I’ve seen requests, I’ve seen people who kind of back down and say, ‘Can I reduce part of my capacity?’ but nothing so drastic that it’s going to affect my budgets.”
CAPITAL ONE BREACH | JULY 30 Credit card issuer Capital One Financial Corp. expects that a massive cyber breach affecting millions of Canadians could cost the firm more than $100 million. The company has $400 million in cyber insurance, although
it is unknown if the breach is covered.
canadianunderwriter.ca
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