In my May article “What’s going on with my Property insurance? Where’s my quotation?” we talked about increased premiums and the number of insurers no longer writing certain classes of business in property insurance.
Is pricing and availability for Liability Insurance any different? No – not really.
There are certain classes of businesses where many insurers who may have offered coverage are lapsing renewals and not offering quotations for new business.
And here’s news hot off the press. Insurance companies are in business to make a profit just like any other business owner. When a certain class of business is not generating enough revenue to pay for the claims, they will stop writing that class. It’s no different than any other business owner who can’t sell a product at a loss.
Is there anything you can do? Yes. Here are a few tips for you and some examples of classes of business that are prone to higher losses.
1. Know your premises. Are there areas that could lead to a slip and fall claim? Stairs, parking lots. Keep maintenance logs that record time, dates, conditions of inspections. Normally you will want to have one person or department responsible and keep those records for up to 5 years!
Lawsuits arising from slip and fall claims continue to increase both in frequency and severity. Building owners and snow removal contractors are feeling the pressure of increased premiums. As recently as six months ago, I was aware of several Lloyd’s Syndicates and a number of domestic insurers who were still providing coverage for snow removal. The premiums were increasing however coverage was still available.
Now there are fewer domestic insurers writing this class and many of the Lloyd’s Syndicates have pulled out as well. This is not the first time and it won’t be the last. In a Canadian Underwriter Article in 2002, https://www.canadianunderwriter.ca/features/snow-no-mercy/ they speak to some of the issues; under-priced premiums, increased claims for slip and falls and loosely-worded contracts.
2.Be careful when preparing or signing any contracts. Are their ways of limiting your liability or perhaps transferring that risk? Are you assuming a risk you shouldn’t be? Does a Hold Harmless Agreement work for or against you?
Recently I went to use the services or firm who wanted me to sign an agreement holding them harmless should they cause damage to my property, whether they were responsible or not? Do you ever read those agreements before signing them? Might be a good idea.
3.Obtain Certificates of Insurance. You want to ensure that all suppliers and sub-contractors carry their own Liability insurance. In some cases, you may wish to explore being an additional insured on their policy.
Whether you are a business owner or homeowner, anyone hired to work on your premises must carry insurance. Let’s take the example of the homeowner who decides to create that awesome “great room”. The contractor removes the bearing wall and without the proper support, the entire structure of the roof is compromised. Without insurance to back up the subsequent property damage, the homeowner can be stuck with a huge repair bill.
Be proactive in protecting yourself from liability claims. Insurance is not a “guaranteed product”. The inability to get affordable insurance coverage could put you out of business.
Heather is a commercial insurance broker with over 35 years of experience and welcomes any questions or comments you may have. Email her at heather@thinkinsure.ca
I’ve proudly represented the insurance industry for 35 years. There isn’t a day that goes by that I don’t see anything negative about our industry. I’ve heard all the stories about increased premiums, poor claims services, crappy claims settlements, underwriting decisions that don’t make sense and the list goes on. Many people are just angry at the industry.
That saddens me because as an insider, I understand. But it doesn’t always have to be this way. We can know our rights and be better informed.
So, let me tell you a story about another industry, one that I recently had an experience with, that opened my eyes to those people who really hate mine.
I recently had a fall which occasioned a visit to the emergency room for a wrist injury. Subsequently I was sent to the hospital for a splint. I was told that I was to have an appointment later that month with Dr. Jones (names have been changed to protect the innocent). A couple days later I was contacted and advised that an appointment had been made with Dr. Smith at a certain clinic and not Dr. Jones as I was advised. The information provided was that it was first-come, first-serve and the clinic opened at 10:30 a.m. I arrived at 10:00 a.m. and was told that the clinic actually opened at 8:00 a.m. and that there was an hour wait for my appointment. I saw that the appointments had been triple-booked for every five minutes. Finally, at 1:00 p.m. (that’s 3 hours folks) I met with Dr. Smith only to be told that I was supposed to see Dr. Jones. Needless to say, I was extremely frustrated but rather than take it out on the individuals involved in this entire process, I did some research.
Apparently, in the summer due to falls, there is an increased need for specialists. The number of patients increases dramatically but the number of specialists remains constant. Thus, the need to triple book just so everyone has an opportunity to see the specialist. Secondly, having been in hospital waiting for surgery, I know that appointments and some surgeries are bumped for unplanned critical situations – car crashes for instance. Lastly, someone made a mistake in booking my appointment. And don’t we all make mistakes sometimes?
So rather than disparage the entire health profession, I chose to ask questions. What were the problems and potential solutions? That’s a discussion I will be having with my MLA.
This brings me back to the insurance industry. The industry in Alberta does have its challenges.
Did you know that of the last 8 catastrophic weather-related issues between 2010 – 2016 that 6 of them were in Alberta? We as consumers are paying for that with our premiums!
Did you know that aside from the Fort McMurray fire, that water claims are more common than fire losses? Over land water claims from floods, sewer back-ups, frozen pipes in commercial buildings and the list goes on!
Severe weather continues to cause extensive damage across Canada. 2018 saw $1.9 Billion in insured damage.
When a disaster hits, the number of claims increase dramatically but the number of trained insurance professionals (adjusters) is the same. It’s no different than the issue of specialists in the medical profession that I mentioned before. Service will suffer but everyone needs to be seen.
Bottom line is it’s time to become informed before we jump to conclusions and disparage an entire industry.
1. Read your policy, ask questions! Did you know that there is no such thing as “covered for everything”? Insurance policies have exclusions and they have them for a reason. Remember, it’s a contract that the insurer MUST abide by. Those contracts are governed by Statute or Civil law and insurers in many cases cannot legally do what you want them to do. Know your rights and responsibilities!
2. Talk with your agent or broker. They are paid either a salary or commission to help you. Ask the questions. Get the answers you need and understand. Never assume anything.
2. The Insurance Bureau of Canada is the Trade Association for the private insurance companies who are members. They have a consumer information line staffed by experienced insurance professionals who are ready to answer any questions you may have – 1-844-2ask-IBC (1-844-227-5422)
The insurance industry is the only consumer product I can think of that has to price its product based on data from the past without having any idea what their costs will be in the current year!
Let’s compare the insurance product to a car. The automaker can accurately predict his cost of goods, labor, overhead, taxes etc. They build in a profit based on what they anticipate they can sell that car for. Easy right?
Now let’s just talk about insurance on property- not auto, liability, cyber risks or the myriad of other products available. Traditionally, insurers could rely on statistics developed over time to forecast future trends. Based on that, they determined the premiums they would charge for that business. Those premiums would have to allow for the costs of all claims, adjusting expenses, distribution costs, overhead costs, taxes and hopefully some profit. Seems simple. Right? NOT!
Add in a factor for competition, changing government regulations and weather patterns that are no longer patterns at all. Also consider rapidly-advancing technologies combined with aging infrastructure and aging buildings and you have a recipe for disaster.
What we see now, in some classes of business in the insurance industry, is the result. Many domestic insurers are pulling out of classes that they normally wrote at very competitive pricing – probably too competitive as they are now realizing. Many Lloyd’s of London Syndicates are no longer operating. Brokers entire contracts are being cancelled across Canada in order to get rid of unprofitable business.
So why should the average consumer care? Because your brokers’ contract to write business was one of those cancelled by one or maybe several insurance companies. They are currently trying to find replacement coverage for hundreds of clients. It could also be because your insurer is no longer writing insurance for high-rise buildings or restaurants, etc. Maybe you had a claim last year. Maybe you haven’t had a claim, but the data indicates you probably will!
That’s where your broker comes in. Their job is not just to find you insurance but also at the best price possible. Not easy! There are hundreds of consumers shopping right now. Yet the number of insurance companies willing to sell certain products has declined. And it’s not just those clients whose policies aren’t being renewed. It’s also those that have seen increases in premium of anywhere from 20% to 120%. They are shopping too.
So, what’s the answer? There is no simple answer. But here are some things you can do.
1. Review your limits of insurance. Don’t reduce them just for the sake of saving money but are you over-insured? Consider an appraisal on your buildings? Some insurers will then provide Guaranteed Replacement Cost. It’s well worth it in the event of a claim!
2. Increase your deductibles. How much can you afford to pay? It’s not uncommon to see $5,000 to $50,000 deductibles on certain types of risks now.
3. Inspect your properties. Are there places where you can work to eliminate the potential for loss? Have you checked the underground sewer lines for blockages? How’s your roof? Does it need repair? Water losses are now more prevalent than fire claims.
4. Before you go shopping ask your broker if they have checked other insurers they represent. A broker who is staying on top of current trends will have a pretty good idea of whether or not your premiums are still competitive.
5. If you do go shopping, find a broker who is willing to really work with you and take the time to do it right. You would never hire an employee without a resume and a reference, so check the brokers’ qualifications, experience and reputation.
6. And finally, be patient. Brokers and Underwriters at insurance companies are experiencing additional workloads as a result of renewal re-underwriting. New business departments are being flooded with new quotes. In some cases, they are getting three times the normal number of submissions.
Some of the above suggestions for saving money may also apply to your other lines of insurance such as auto or commercial liability. We’ll talk about liability insurance in our next blog!
For more information or to answer any of your questions, email heather@thinkinsure.ca or give me a call! 587-597-5478.
