Insurance Gaps Caused By Inflation


According to a new report by TÜV SÜD Global Risk Consultants, inflation has led to insurance coverage gaps and disaster resilience problems for many companies. These coverage gaps arise due to losses from natural disasters – such as hurricanes and wildfires – resulting in claims that do not cover rebuilding or replacement costs.

The report found that many companies unintentionally underreport the valuations of their properties and equipment to insurance carriers, leading to mismatches between reported and actual values. This ultimately results in coverage gaps.

The report cited rising construction costs as a significant factor, with everything from paint to wallboard to roofing contractors becoming increasingly expensive in an inflationary economy. David Rix, global sales manager at TÜV SÜD Global Risk Consultants, emphasized that companies must defend their values because underwriters are now requiring more data on how they determined asset valuations.

However, many companies are not prepared for this, leaving them unable to collect enough to restart their business flow after a claim.

The report also highlighted that property valuation is a crucial foundation of property underwriting and impacts various aspects of the insurance risk transfer process. This includes projected claims values, replacement costs, adequacy of coverage, and inflation considerations impacting future physical asset and business interruption values.

Risk managers are advised to partner with seasoned valuation specialists to establish credible property and equipment valuations for underwriting.

The report, titled "How Inflation Led to Property Insurance Coverage Gaps," also includes year-over-year inflation data on construction and labor costs. Additionally, it is discussed why rising construction prices lead to inaccurate insurance claims and coverage gaps.

Justin Chen, global manager for property valuation services at TÜV SÜD Global Risk Consultants, suggested that companies with large real estate portfolios should update their statement of values (SOV) every three years or more to avoid coverage gaps.

If you are unsure if your organization has reported accurate property and equipment values, reach out to one of our licensed experts today at 905-696-9090 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

In the last two years, Hubbard Insurance Group has helped pay out over $7.5M in claims to our clients. Reach out to us today to make sure you have the right protections in place!


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Benefits Trends - 2023


Navigating the benefits landscape has been a complex process for companies over the last twelve months, as they balance the need of keeping expenses under control with the necessity of producing attractive packages to remain competitive in the current job market.

Despite massive layoffs in tech and other industries at the start of 2020, the job market is still largely dominated by the employees. This has forced employers to remain competitive when it comes to providing benefits and compensation.

Simultaneously, the increasing inflation and concerns about a recession are making both employers and employees more frugal with their spending.

Experts expect this trend of finding the balance between spending and saving to continue throughout 2023 as well.

Sally Prather, an industry expert, stated that "Employee retention and inflation pressures are the two biggest issues keeping employers up at night.”

“The ripple effect of the Great Resignation has increased the emphasis on retention as companies seek to balance economic volatility with strong benefits packages, including paid time off and voluntary benefits, to shore up their employees,” she added.

Ultimately, the onus is on the employers to maintain an engaged workplace. The most effective way to achieve this goal is to meet the demands of employees in order to demonstrate how valuable they are to the organization.

Recent research has revealed that a significant number of employers (60%) are planning to introduce new insurance benefits within the next few years – which is nearly twice as many as five years ago.


Rising Cost of Healthcare

Controlling the rising costs of health care is likely to remain a primary focus for businesses this year. Many aspects such as inflation, economic unpredictability, and the utilization of health care services during the pandemic have led to higher than usual price increases for 2022 and a predicted uptick for 2023.

According to experts, the average expected medical plan costs per employee will be 5.6% higher in 2023. This is a notable rise from the 4.4% increase that was predicted for 2022.

Since employers are working to maintain a positive image to both existing and potential employees, they are choosing to absorb the rising premium costs instead of transferring them onto the workforce. This has then added a further spotlight to cost management.

"Some [employers] are looking to implement plan design changes to combat rising health care costs, others are considering self-funding, and others still are embracing specialized health management programs and teletherapy to cope with inflation in the industry, all while over-communicating with employees," Prather explained.

To reduce expenses, employers are looking into making modifications to their benefits plans – such as increasing deductibles and self-funding, introducing more wellness activities, establishing disease management programs, and motivating workers to make informed healthcare decisions using cost and quality comparison tools.

Companies also are creating limited yet effective networks that deliver both affordable and exceptional care. In other words, the focus has shifted more towards preventative care.

"As organizations seek to design benefits around their employee populations, innovative strategies, such as specialty carve-outs and onsite labs, often present win-win situations," Prather said.


Voluntary Benefits & Mental Health

In an effort to manage costs without losing appeal to employees, an increasing number of companies are turning to voluntary benefits such as life insurance and supplemental health coverage.

The hope is that these programs will provide employees with valuable supplemental coverage whilst keeping the employee-born cost low.

An increasing number of workers have expressed interest in voluntary benefits provided by their employers – such as critical illness protection, hospital indemnity, disability income, and accident insurance.

This is based on recent studies that have revealed that 63% of employees are likely to take advantage of these offerings, which is a significant increase from 2017 when 45% had the same inclination.

"Products such as life and long-term-care insurance can assist in providing financial security. Health products can also help to fill in the financial gaps that may be left by core health plans, especially in the event of an unexpected life event or a medical emergency," Prather said.

"These solutions provide employers with alternate platforms for engaging with their employees, and, in turn, making [employees] feel as if their companies care about their financial wellness,” she added.

The current health crisis, along with high cost of living, is causing elevated levels of anxiety and burnout. This has shed light on the importance of mental wellbeing in the workplace and how employers should approach it.

Experts have highlighted that mental health will be a major issue to tackle given the current financial difficulties, the combined effect of the pandemic over three years, and the adaptation to a hybrid work setup.

There is also belief that, as conversations around mental health and treatment become more common and more accessible, people will be more likely to take advantage of these services.

It is clear that 2023 will be a major year for benefits – with employers who refuse to modernize their approach at a major risk of losing their appeal to employees.

Contact one of our licensed experts today at This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at 905-696-9090 to discuss your options as an employer and how you can stay ahead of these trends. It is possible to offer employees benefits in a cost-effective way – and doing so could be the difference between success and failure.

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Why Are Auto Insurance Rates Increasing?

According to recent reports, the auto insurance sector in Canada may experience a shift in 2023; however, this shift is likely to be represented by an increase in premiums.

Expert analysis of the Canadian auto insurance sector in 2023 shows that insurers entering the new year must not only adjust their premiums to keep up with inflation, but also need to factor in the steady increase in drivers since the easing of public health regulations in the early part of last year.

One reason why auto insurance rates have gone up this year is because of Canada's continuous inflation, which has caused insurance companies to modify their rates to keep up with the value of some forms of accident coverage.

This inflation has also impacted the deductible amounts – resulting in policyholders needing to pay more out of pocket. Along with this, insurers raised their rates after two years of rebates during the peak of the COVID-19 outbreak. All these elements serve as explanations for the changes to auto insurance rates.

According to experts, “for current policyholders, rate increases take effect at the time of renewal, so some customers may have already seen their premiums rise, while others may see it in the coming months.” They further stated that, with Ontario’s FSRA still approving rate increases, an average premium increase in the high single digits is expected.

The expectation of authorities is that auto insurance rates will rise by 5% in in the first quarter of 2023 and up to 7% in Q2. Whilst it remains unclear what the increases will be in Q3 and Q4, experts expect them to be in the 2-3% range.

Ultimately, the best option to save on auto insurance premiums remains to shop around. However, it can be hardly expected of any single individual to understand the ins and outs of all the different insurance markets out there. This quickly becomes a daunting process.

That’s where Hubbard Insurance Group comes in – we will do the research and groundwork for you. Reach out to one of our licensed experts today at 905-696-9090 or simply email us at This email address is being protected from spambots. You need JavaScript enabled to view it. in order to find the best auto insurance rates for you.

Our licensed experts will make sure you have all the coverage that is necessary for you at a cost that makes sense. Reach out to us today!

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Business Interruption & Risk Management – What Did We Learn From 2022?

Over the last few years, business interruption has been a major issue in risk management. The worldwide spread of COVID-19 and the ensuing lockdowns and travel limitations had a significant consequence on many businesses, causing huge losses.

In 2022, before the world had completely recovered from the pandemic, business interruption was back in the spotlight after Russia invaded Ukraine and NATO retaliated with a slew of economic sanctions on Moscow.

According to experts, supply chain impact and cybersecurity failure are two of the risks that worsened the most from 2020 to 2022.

Andrew Tait, a veteran of the risk management industry, pointed out that we have learnt through difficult experiences that supply chains are more connected than we had initially assumed and can be exposed to various risks.

We are now aware that we must boost our aptitude for regulating supply chains proficiently and consider aspects such as critical employees, technologies, shipping paths, and customer needs.

Moreover, there is a greater requirement to consider potential scenarios that could disturb operations in new ways – for example, a blend of war, natural catastrophes, and public health crises.

Regardless of whether a business faces insurable or non-insurable losses, their profits and clients can be deeply impacted. Therefore, it is essential that companies take a proactive approach to becoming resilient and make adequate plans in the event of business interruption.

This is an issue that can not be overlooked as it can have grave consequences on the company’s revenues and its reputation.

Many organizations and their risk management teams are guilty of failing to recognize the unrecognized dangers that exist. This leads to an absence of an overall understanding of the potential ramifications of disruptions, thus resulting in poorer organizational risk outcomes.

According to Tait, a major fault in the BI exposure calculation and reporting approach – which is basically a representation of global income minus variable costs – has resulted in the current issues we face.

When we confine the BI exposure discussion and related reporting to only insurance procurement and yearly ‘allotted’ BI, it restrains the capability of the operational team to comprehend the potentially disastrous effects of real exposures.

If we do not establish a reliable way to compute and comprehend the real global effect on margin – including secondary outcomes from the loss of a single site, production line, boiler, trade route, supplier, or technology system – then organizations cannot rationally prioritize expenditure in supply chain protection.

A frequent misstep that numerous businesses make is not having an active plan in place for business continuity and disaster recovery, which results in them underestimating the magnitude and duration of the disturbances they may experience.

“Now is the time to sharpen the axe before the next real-world event,” Tait said. “Management hates surprises, and product supply chains are the lifeblood of so much of what companies do – so why are we surprised by product shortages that materially impact results?”

Companies that have experienced difficult times have the opportunity to correct their mistakes. According to Tait, businesses should focus on grasping the details of their supply chains and the factors that can influence them. Risk managers, business leaders, and the entire industry as a whole should be ready to predict risks in advance and make plans for better results.

According to this article on Insurance Business Mag, “Tate shared a sample supply chain risk planning process consisting of 10 steps”:

  1. Identify and document priority products/product families.
  2. Map supply chains, including critical suppliers/customers (to manufacturing site).
  3. Quantify the annualized impact of the loss of critical sites, down to individual production lines.
  4. Identify and catalog inventory positions, lead times, alternative sourcing strategies, parallel or redundant product standardization, key staff, technology dependencies, etc.
  5. Assess the potential duration of outages and restoration periods (current and best future case and then add additional time for unanticipated delays).
  6. Develop risk curves across a range of possible return periods.
  7. Document plans to prioritize action to protect – and communicate with management.
  8. Conduct a gap analysis and perform risk assessments to identify vulnerable sites/nodes.
  9. Develop appropriate plans, policies, and procedures for business continuity/resumption.
  10. Rinse and repeat.


Going forward, Tait anticipates more difficulties for present tenacity models – since countries are pushing towards regional uniformity rather than global interconnection. With companies depending more and more on technology to run their businesses, the danger of a disruption in the supply chain will increase and so will the costs.

He also predicted more demand for openness from customers, shareholders, and boards of directors; as well as continuous progress in tools and services to render and understand supply chains.

Insurance providers, then, are likely to award those who have a better comprehension of their exposure. This should result in improved skills in supply chain management.

“To all risk managers who want to make a difference, we urge you to partner with the operations and senior leadership to drive engagement and begin the journey to resiliency,” Tait said. “To provide a little hope – this may help offset some of the increasing risk increases we are experiencing due to global warming, shortages of critical raw materials, and dynamic geopolitical stresses.”

If you have any questions or would like more information on how your business may be impacted by BI in the coming year, please reach out to one of our licensed experts today at 905-696-9090 or simply email us at This email address is being protected from spambots. You need JavaScript enabled to view it..


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Insurance Market Outlook - 2023


Business owners’ top three risks in Canada are cyber incidents (35%), the skilled workforce shortage (33%) and climate change (29%) – differing from last year when business interruption, cyber incidents, and climate change were deemed the top 3.

We’ve been talking about the current “Hard Insurance Market” environment for the longest running cycle in industry history. Normally lasting 18-24 months, we’ve now seen more than 17 quarters of increasingly tighter prices. This is unprecedented.

The current market environment is unique because of the confluence of so many challenges. Recessionary concerns are top of mind as governments work to tame inflation and equity markets reside in bare territory.

There is ongoing uncertainty around loss trends due to entrenched inflation, supply chain issues, climate change, and social inflation (read: legal costs).

As a result, most insurers are suggesting 10% to 15% increases on property replacement costs across all sectors in order to reflect inflationary prices.

As indicated, when looking at your property insurance limits please be sure to take into consideration that inflation has caused coverage gaps resulting in many claims that don’t fully cover rebuilding or replacement costs. There is a bit more detail here on that if you are interested but insurance companies are finding that traditional inflationary increases of 4-7% are more like 11-15% these days to keep pace with inflation.

While market conditions remain complex, there are signs of improvement showing across commercial property, general liability, commercial auto, and directors & officers (D&O); however, insurers remain worried about cyber and technology errors & omissions (E&O).

The market has changed significantly over the last two years – with insurers maintaining strict underwriting guidelines and risk selection. Rate increases are continuing; albeit less severely compared to 2021 and 2022.

Real estate, transportation, mining, roofing, and food manufacturing are all challenging industry sectors. Insurers are concerned about Canadian companies with U.S. operational exposures and, as U.S. litigation costs continue to drive up rates, we are seeing signs of restricted capacity for this coverage.

Cyber and technology E&O remains challenging for capacity, especially in higher risk sectors including cannabis, cryptocurrency, payment processors, public sector, municipalities, and educational institutions.

CYBER Spotlight

Canada’s ongoing hard market in cyber has seen most insurers capping their coverage at somewhere between $3-million and $5-million. The average cost from data breach incidents reached an all-time high of $4.35 million in 2022 and is expected to surpass $5 million in 2023.

Several insurers have stopped underwriting Canadian cyber risk outright due to the extremely difficult landscape right now.

Exclusions for known software vulnerabilities and capacity restrictions continue to be prevalent as claims continue. 

Premium increases can be expected at around 40-100% increase for above average (i.e. low risk) clients and between 100-400% for below average (i.e. high risk) clients, according to industry experts.

Healthcare breach costs were around $10 million in 2022; for cyber insurers, this has been the most expensive industry segment for 12 years running.

Financial services are also a high hazard, averaging $5.97 million in cyber claims costs, followed closely by pharmaceuticals, technology, and energy sectors.

We continue to encourage clients to add any additional information to applications in an addendum as many questions are Yes/No and without context. In addition, implement insurer recommendations such as multi-factor authentication, employee training, backup procedures etc., as these can go a long way to putting the best foot forward with underwriters. 

Questions? Touch base with one of our advisors or simply email us.

Thank you for your confidence in our office; it is not something we take lightly. We know you have a choice of where to secure insurance.

John Hubbard - President

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