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Insurers found to be more capricious ; the applications are exploding, with wholesale

by

Andrea Lubeck

22 May 2018 07:00

The wholesalers contacted by the Journal of insurance say they observe a significant increase in requests since the beginning of the year. All explain the phenomenon by a hardening of the market.

Sébastien Gabez, chief financial officer and vice-president for Quebec in APRIL Canada, estimates an increase in the requests of the order of 20 % to 25%, compared to the usual average since the beginning of the year. «I feel an appetite lesser of the part of the insurers, especially in the insurance business in mass, and in certain niches of this segment «, he says.

Insurers withdraw from certain niches, remember Guy Boissé, president, sales and operations insurance, in an insurance Group Totten. «There are Markel, Economical and others who are in reorganization. We note that insurers domestic realign. In addition, 2017 was not a year pay. All the effects that were not expected are felt. It was a bull market in respect of premiums «, he explains.

Several accounts of the so-called «easy» or traditionally underwritten by the insurers regularly find themselves on the markets. Pierre Chicoine, president of Profescau, recalls that the wholesalers are there to the dealers. «In Quebec, there are very few insurers. The easy solution for brokers who end up having to shop is to do business with wholesalers. «

Natural disasters also cause

Mr. Chicoine added that the deterioration of the financial results of insurers caused by the losses related to natural disasters leads them to redefine their risk appetite. «They have lost money with the disasters and do not make a profit with the risks on a regular basis. For us, this leads to an increase of the amount of requests. Since January, we have difficulty to deal with all the claims and we see that brokers are looking for solutions «, he says.

«With the natural catastrophes and reinsurance, insurers need premiums, confirms for his part Jean-François Raymond, president of Groupassur. Nothing indicates that the market is going to soften, it is even the opposite. «

Several noted that this trend may not be slowing by the end of the year. «I don’t know how long it will last, but I suspect that it will continue for at least twelve months «, said Mr. Chicoine.

«It is hard to predict when the flood of requests will slow down, but the first trimester may be a good indication of the following. The situation could take between 12 and 18 months to calm down, » says Mr. Boissé.

Sébastien Gabez has especially noticed the effects of this tightening of the market in the segment of insurance of heavy vehicles and transport. «Nothing that in the month of April, April has doubled the amount of new business than what is normally subscribed. And this doesn’t count the renewals. «It underlines that the conditions which restrict the rate increases and the number of smaller insurers present in the market to justify these results.

He welcomed the fact that this rise in applications translate into business growth. «We come to purchase between 20 % and 25 % of these additional requests, or a rate in industry standards. This is clearly good news for us, » said the CFO of April.

Mr. Gabez note, however, that not all segments in the insurance companies who suffer from the effects of the hardening market. He cites the example of the taxis and the boats.

All in all, these market conditions promise to be favorable for the wholesalers, » said Johanne Pistagnesi, president of Pistagnesi Doyon. «The tightening of underwriting standards of insurers regular was beneficial in 2017 and will continue to be in 2018. «

Shirley Gauthier, director, Quebec, First in Canada, and Pierre Chicoine also said that events in London that have affected the market of Lloyd’s. «The contracts of agency and capabilities coming from London have been the most difficult for some,» notes Gauthier. Mr. Chicoine adds that the trade unions have also seen their profits go down.

Rare workforce

Some wholesalers are struggling to respond to this flow of requests. «We have boxes with a few employees, unlike insurers who can count hundreds. We can not handle the influx of new requests. We therefore give priority to our renewals. It receives an average of twenty applications per day, » says Pierre Chicoine. In the case of Group insurance Totten, this figure rises to a hundred requests per day.

Ms. Pistagnesi raises the same issue. «Recruitment remains an important issue. Our subscribers should be able to analyze the records without the use of tools pricing it as among the big insurers. «

In contrast, Sébastien Gabez said that April is able to cope with this increase. «We have a team of ten underwriters dedicated to the insurance companies that are willing to accommodate requests. «

«This is not an easy year for anyone, both for insurers and for brokers. One has only to take as an example the situation in trucking. The latter should be more shopping, some risks previously placed with insurers on a regular basis. Brokers are caught between the insurers and clients, which don’t necessarily include the trend of a hardening market. It is a year of transition for the brokerage, » says Mr. Gabez.

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