How to message the hard market going forward

Profitable insurance companies mean stable and reliable protection for policyholders in a time of uncertainty, and the property-casualty insurance industry in Canada should not be afraid to reinforce that message, industry executives said at the NICC conference in Halifax earlier this week.

“I’m thinking about Lloyd’s journey to a place where we can provide ongoing underwriting appetite and address some of the big risks,” Marc Lipman, president of Lloyd’s Canada, told an insurance panel Monday. “I think you can only do that from a position of…financial stability, if not strength.

“You need to have the resources in-house if you want to tackle some of the biggest issues and support clients through them. So I don’t think we as an industry have to apologize for the success.”

Lipman alluded to the fact that Lloyd’s global marketplace reported a profitable combined ratio of 91.4% in the first half of 2022, as opposed to an unprofitable ratio of 104.5% in 2018, prompting Lloyd’s to do so to “rehabilitate” some of his unprofitable books. Business.

“I think if we intelligently speak to our customers and explain why a sustainable insurance industry offers long-term predictability in terms of coverage and protection, there’s a compelling case for that,” Lipman said. “But like all messages, it must be delivered in the right tone and not be deaf.”

NICC delegates for 2022 heard about several risks the industry faces going forward – geopolitical risk, inflation, disrupted supply chains, global recession, climate change, etc. – but reputational risk emerged during several panel discussions.

NICC 2022 Emcee Alister Campbell, president and CEO of the Property and Casualty Compensation Corporation (PACICC), clearly outlined the risk in his introduction to a panel of insurers on Monday.

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“There are some ailments in society that the pandemic has caused in part, but perhaps only exposed, that have raised doubts about the institutions,” Campbell noted. “And our industry sells a promise fundamentally based on trust. And when people start to doubt institutions, we’re on the list of people to doubt.

“I think this idea of ​​doubling down on what we do well, this promise, makes perfect sense. But in this context, how do we feel about being an industry that has just had perhaps the best two years in a row in our entire history – and we’re going to hike rates again? How is that supposed to work in terms of trust in society?”

In 2021, industry premiums earned grew 8.4% and claims fell 10.7%, resulting in more than $10.6 billion in underwriting revenue, according to MSA Research. The industry’s combined ratio was 83.7% last year, while the return on equity (at 17.2%) exceeded 12% for only the second time in 16 years.

However, this has come at the expense of policyholders in the wake of a two-year pandemic that has seen several commercial policyholders suffer financially. The result marked difficult times for consumer-centric brokers, noted panelist Paul Croft, Aon Canada’s chief operating officer, at a commercial insurance panel.

“One thing we underestimated is the impact the tough market has had on our industry and our customers over the past several years,” Kroft said Monday. “We took a lot of hits with it. I can comment on that. I remember a call in 2020 with a customer calling. They paid half a million dollars to insurance and suddenly their insurance bill was $2 million.

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“They called us and said, ‘We appreciate the training and that you kept us up to date. We understand why this is happening. But at the same time you have to be aware that I have to let a few people go to pay this extra cost. You have to understand that now I’m going to call someone and let them go.’”

Kroft went on to warn, “I think sometimes it’s easy for us to talk about the tough market and rationalize, ‘Well, we had to do this because our [claims costs] increased,” but the social and economic costs of what we had to do as an industry had an impact that continues to impact our consumer base.

“So going forward, it’s imperative that we educate the people and support our staff who need to do this. It’s a very stressful time for brokers, surveyors, insurers… but also affected [customers]and I don’t think we can lose sight of that.”

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