The tough calls brokers insurers will be making this year

The pressure on insurers to achieve sustainable results, brokers expanding their service offerings, and the widening gap between young and old are just some of the trends the P&C insurance industry will face this year and that of business executives An industry expert predicts that there will be a lot to think about.

In his annual presentation on the top trends for the coming year, Phil Cook, chairman of Omega Insurance Holdings, cited a total of 20 trends he expects – 10 accelerated by the pandemic, five caused by COVID-19 and five that come no matter what. (See the sidebars for a full list.)

Industry Trends & amp; Predictions: 2021 this year was practically held by the Insurance Institute of Ontario due to the pandemic.

In a trend unrelated to the COVID-19 pandemic, Cook stressed that insurers will face pressure to produce sustainable results. This would happen whether or not the world changed in March of last year, as the results at the end of 2019 were already unsustainable and unattractive to investors.

“And it will continue like this. We need to get back to these sustainable results, ”he stated. « Hopefully the curve [combined metrics] will fall below that 100% and the return on invested capital and excess will be in that range above seven, which is a threshold for many investors. »

In a trend accelerated by COVID, mergers and acquisitions are expected to increase this year, and possibly the gap between large and small companies in the P&C industry will widen even further.

According to Cook, when you look at industry averages for results, you don’t see many companies that are actually in that average range – they are usually on both ends of the spectrum. Add on last year and the spread can get even more dramatic, not to mention creating an increasingly unstable environment.

« And that does not lead to very stable underwriting when a large number of companies are making a significant amount of money because their combined rates are very low and a number of insurers are not making money and losing a significant amount because their rates are higher, » said Cook. “There has to be a way that these results can move closer together. In an industry our size, there should be more companies that are consistently within 10% of the average in order to become a stable market. « 

While this is a trend caused by COVID-19, according to Cook, he believes medium-sized businesses (both insurers and brokers) will face challenges. Are they getting bigger and competing with those at this higher level? Or do they stay small and pursue the niche market? The pandemic made this debate even more important.

« I think domestic companies in Canada will also consider some acquisitions so they can resolve the midsize situation: » Are we getting bigger or are we getting smaller? « Cook predicted.

In another trend caused by COVID-19, he sees brokers expanding their advisory services. Brokers are no longer just someone helping clients find coverage, they are now professors, social activists, volunteers and more, Cook said, calling this a « healthy » development of the broker-client relationship.

“And I think if brokers were concerned not to be perceived as not worthless for commission, that would be the reverse for those who are able to provide that kind of support, advice and guidance to their clients. « 

Feature image from iStock.com/akindo

The tough calls brokers insurers will be making this year
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