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Insurance Market Outlook 2020

Rasikh Khan

Insurance News

At the beginning of each year, we delve into the “Crystal Ball” and predict where the insurance market is going for the next year. We have talked about the onset of the changing insurance market for several years now, and 2019 was when it rea...lly hit home; impacting virtually every line of property and casualty lines of business. The Cause Put simply, the foundation of the change in the market was largely reported as the big result of insurers paying out more in claims than the premiums they take in. This was an unsustainable business model, especially when ROI’s are not driving large multiples to offset it. We also feel that there is a lingering effect of some irresponsible underwriting over the past decade. The Effect Market cycles, or “corrections”, are common in many industries – and for the insurance industry, it’s resulting in three main areas of change: increased premiums, stricter underwriting rules, and reduced capacity (or an unwillingness to write business). So if a ‘triple whammy’ wasn’t a thing before, it is now - “thanks insurance industry!” … said no one ever. Some of the hardest hit industries continue to be transportation, hospitality, realty, and retail to name a few. However, virtually every industry sector and personal insurances have all felt the pinch and many large insurers are telling us not to expect the pressure on prices to ease up any time soon. We do see a bit of light at the end of the tunnel though. For “Best In Class” business, we think we will see a leveling off of the drastic rate increases; being replaced by more predictable, low-single digit increases. Cyber liability saw a huge spike in claims ratio from 22.3% in 2018 Q3 to 114.1% in 2019 – and continues to top the list as Risk Managers #1 concern, followed closely by Business Interruption. General Liability Rates Increasing There has been pressure on liability rates for some time, especially with claims in areas not as prevalent historically such as: psychological damage, concussions, post-traumatic stress disorder, and chronic pain. Illustrated by a greater representation of lawyers on files is the inflation in liability premiums. Property Insurance One trend of note in Q3 of 2019 was that there were marginally improved results in property lines – both personal and commercial – which should mean we will see a leveling out of increases in both of those areas of insurance. Automobile Insurance Claims ratios in the auto insurance sector continue to climb nationwide, led by an ongoing increase in personal auto claims payments. We hope that further increases will return to only single-digit increments going forward. Directors & Officers Liability (D&O) Following a prolonged flat-to-declining rate environment and an expansion of coverage for more than 10 years, Public, Private, and Not-For-Profit segments will see increased premiums this year. This is the result of higher claims frequency, severity, and increased loss costs. More

Aug

CISRO Principles of Conduct

Aug

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Will Ferrell's Insurance Dream

Will Ferrell Hubbard Insurance Group Insurance Dream

Jun

Considerations For Leading A Hybrid Team

In the space of two years, most offices went from 100% in-person work to 100% remote; but now many offices exist in some middle ground between the two. With hybrid work being a fairly new model to most workplaces, there’s still some ambiguity around how to best work with this new mixed set-up. Hassan Osman manages virtual teams for a living... at Cisco System, and in his new book Hybrid Work Management, he shares his expertise with working in more flexible environments. BE STRATEGIC There’s a lot of work that needs to happen before you can create a hybrid work strategy. You’ll need to consider the requirements of each job (roles, projects, tasks, customer needs) and the requirements of each employee (flexibility, fairness, inclusion, work-life balance). It's a good idea to survey everyone to learn what their individual needs might look like. To make an equitable hybrid work plan, you’ll need to go beyond a one-size fits all solution and consider all the various exceptions that inevitably come up, since everyone’s situation is different. Osman’s book only takes about an hour to read, but a large portion is devoted to this analysis and it goes very far in-depth into various considerations you’ll want to keep in mind. OPTIMIZING YOUR PLANS You may need to rethink some tasks and workflows, but it can also be a great time to reassess how things are currently working. You don’t want to adapt an inefficient process to a hybrid work environment or you’ll just end up replicating its flaws. You’ll need to plan for both in-person and remote aspects of work. What work can your team best do in the office versus remotely? It’s a good idea to try to maximize the benefits of the team being together in the office—prioritizing in-person meetings and collaborative activities. Remote work is best utilized to accomplish focused individual work. You may even want to consider a meeting-free remote day once a week. Similarly, it’s a good idea to batch all your meetings that require face-to-face interaction in the same day or two. If you’re not optimizing your schedule in this way, you’re missing out on one of the biggest benefits of a hybrid model and might as well be 100% remote. MANAGING A HYBRID TEAM One of the biggest concerns for a hybrid team, is inadvertently creating a two-tier system between employees who are more in-person and those who are more often remote. Ideally, you the want the employee experience to be as similar as possible among all employees. Osman’s suggestion is creating a remote-first culture. This means, when developing new processes, defaulting to remote as the norm and building out from there. This requires all meetings to be held online, with everyone on camera. An easy way to make remote workers feel more included in in-person meetings is to implement a buddy system, where an in-person worker and a remote worker instant message, to ensure the remote employee isn’t missing anything important that’s happening in the room and to help advocate for the remote worker if they’re having trouble contributing to the conversation. Something managers should keep in mind is the propinquity effect—the tendency to have an increased fondness for people you spend more time with. It’s good to be aware of this, so that it isn’t biasing your assessments between employees. Similarly, managers who are on-site tend to have more information about what the other in-person workers are doing. To compensate for this, Osman recommends frequent check-ins to both stay on top of what remote employees are doing and to make sure that they feel as supported as their colleagues. Building an effective hybrid work model for your team is a huge undertaking that’ll entail constant revision and improvement. There are many other aspects deserving careful thought and attention—Osman’s book and his appearance on the Coaching for Leaders podcast points to many other areas you can focus on. Some of this may feel a little like reinventing the wheel, but a successful hybrid team needs the same thing as any team using any model—a good leader. And if you’ve read this far, they’ve got that and that’s a great start. Source: IBAO/The Ontario Broker Volume 22 Issue 2 More

Jan

Insurance Market Outlook 2022

The Canadian property & casualty (P&C) insurance market remains in what is termed a ‘hard market’ environment, challenging for us and clients alike. In fact, in over 30 years in the business, I’ve have never seen a market cycle like it.Rate momentum in many sectors seems to be stabilizing, some capacity re-entering the market, and the insu...rance companies finally appear to be coming to grips with their own risk appetites and aversions. We saw tremendous rate pressure through 2020 and 2021. With increased claims costs, ‘extreme’ weather events water damage in general has caused prolonged and significant pressure in most types of insurance. Early on in 2022 we’ve seen some slowing trends of that upward rate pressure in many sectors of insurance – certainly not any reductions at this point – but the increases are not nearly as punitive.Directors & Officers (D&O) and Cyber Liability are two lines of insurance that remain in a very hard position rate increase wise. For D&O, insures are still very much concerned that this line of insurance will be hit hard by claims in the wake of the pandemic. I’m not entirely sure that we see it that way, especially in Canada, but D&O is certainly impacted by global happenings and there are plenty of class action lawsuits in their early days and reportedly more on the horizon. On the Cyber coverage side of things, insures have been hit hard and often with claims in the past 12-18 months especially. Ransomware claims, coupled with a general lack of sufficient cyber security controls, has led to rapid hardening in the cyber insurance market, with widespread rate increases, a reduction of capacity, and major shifts in underwriting and risk appetite. Capacity is still an issue as insures remain careful what policies they write, but nowhere near as dire as 2020-21, while self-insured retentions and deductibles continue to increase. We think that the amount of consolidation of insurers has contributed to this as well.Large commercial risks, construction, transportation and umbrella/excess liability still face the ‘hard insurance’ environment in this regard. There is a bit of a ‘wild card’ or unknown out there and that the trend of reduced auto and business claims during COVID related shutdowns, which are starting to reverse. If that pushes claim payouts and losses in general back to pre-pandemic levels, then there will be a negative impact on the industry – one that could jeopardize some of the ‘good’ news above.Our principal focus remains to advise our clients on the best road forward in regard to their insurance programme. 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 More