Inflation creates opportunities for brokers to review risk with clients

Recent inflation trends notwithstanding, data from recent quarters indicates that premiums are stabilizing as the property and casualty insurance industry pulls out of the tough market, said Celyeste Power, executive vice president, Strategic Initiatives and Defense. interest to the Insurance Bureau of Canada (IBC).

“A lot of things remain uncertain right now, with inflation, supply chain disruptions, cyber, catastrophic weather events, and more,” she said. Canadian underwriter. “I can’t say what this means for the future, but what we’ve seen so far is certainly a stabilization of premium increases out of the hard market.

“It’s a competitive industry, which means that each insurer is going to look at each company in their own way.” She noted that policyholders could take advantage of this competition to shop around for rates.

Brokers and agents, on the other hand, are well placed to inform clients of emerging factors that may affect their risk.

“You want to check that your commercial property insurance coverage reflects the correct valuation, as replacement costs may have increased due to inflation,” she said. “What we have discovered through the hard market is that risk mitigation and management is key to ensuring a long-term sustainable insurance scenario for any consumer.”

High-end building materials will also impact commercial property valuations, noted Bernard McNulty, principal agent at Allianz Global Corporate & Specialty.

The increased focus on achieving ESG (environmental, social and governance) objectives is increasing demand and costs for environmentally friendly building products and components, he said. CPU. Likewise, expectations for social responsibility around where products are purchased are increasing.

Proactive risk mitigation efforts, such as a restaurant owner who suffered slip-and-fall claims replacing the stairs that led to those claims, are also valuable for policyholders, IBC’s Power said.

She added that these policyholders sometimes fail to notify insurers of any upgrades.

“If you make any upgrades – you install new stairs, new sprinkler systems, new security cameras – make sure your insurance representative is aware of this and that it is clearly explained to both your broker, your agent and the underwriter,” Power said. .

Along with price inflation, McNulty said the factors driving social inflation continue apace. He cited litigation funding, higher jury awards and increasingly aggressive plaintiff firms as major contributors to the trend.

“I believe these two forms of inflation that we are experiencing will prolong the existing hard market in Canada,” he said.

“To cover rising claims costs, insurers need to ensure that adequate premiums are charged. In the short term, rising interest rates exacerbate inflationary factors, but will have a cooling effect in the coming months.

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