Brokers adapting to pandemic, hard market adversity

Brokers have adapted well to the unprecedented challenges posed by the worst global pandemic in more than a century, on top of a hard insurance market, according to the Trusted Advisor 2021 survey by Canadian Underwriter.

Brokers are “a very resilient group,” said Danish Yusuf, founder and CEO of Zensurance Inc. in Toronto.

Rodney Munro, vice president of operations at AA Munro Insurance Brokers Inc. in Whycocomagh, N.S., said most brokers were able to adapt and make major changes, such as enhanced use of technology, to accommodate the need to distance physically and work remotely.

Some did so more quickly than others.

“Many brokers didn’t rely on a voice-over-IP system that might allow them to move physically from one location to another, so they were slowed down because of dated technologies. But I think that those firms got caught up over time,” he said.

Survey respondents were asked if their broker “communicates with you using your preferred style of communication (e.g. phone, in-person, text, e-mail, social media, etc.).” A full 82% of business respondents agreed or strongly agreed with the statement, up from 77% in 2020. The corresponding consumer client figures were 80% and 76% over the past two years.

“We have been trying to target what the customer is looking for in terms of how we communicate with them. We’re moving a lot more towards an electronic focus in our offerings,” said Munro, who added the COVID-19 pandemic accelerated the firm’s work in that area.

Prior to the pandemic, broker-client in-person meetings were perceived to provide higher-quality service, said Yusuf. While for a select few that may still be important, by adapting to the new circumstances brokers and clients have have discovered greater flexibility and convenience if they have access to technology that will allow them to connect remotely.

The survey results indicate brokers have had a positive impact on their clients in terms of finding new ways of working with them, he added.

Respondents were asked if, when renewing their policy, or making changes, “your broker is available to answer your questions on a timely basis,” to which 82% of business respondents in 2021, compared to 77% in 2020, agreed. For consumers, the corresponding numbers were 83% and 80% in 2021 and 2020, respectively.

Yusuf called that response “amazing” considering not all brokers or clients, particularly those in remote communities, have access to high-speed internet.

There are though, said Yusuf, two key responses that stand out as having relatively low favourability ratings toward brokers when policies are being renewed, or changes are being made.

Only 72% of business respondents in 2021, compared to 70% in 2020, and 66% of consumers, from 65% in 2020 agreed their broker “finds the best insurance available at the right price for your budget.” And, only 64% of business respondents in 2021, up from 62% in 2020, and 50% of consumers, down from 52% in 2020, agreed their broker “gives you a wide variety of options and choice.”

“The pandemic resulting in an even harder market could absolutely have played a huge part in those results,” Yusuf stressed.

For example, a large insurance company Yusuf relied on for presenting comparative quotes to small business clients exited that segment of the market entirely, resulting in fewer quotes being available. That was on top of logistical delays because of major changes COVID-19 brought to the working environment.

Even before the pandemic, the hard market resulted in insurance companies pulling back capacities, unwilling to insure the same amounts as in the past. Rates, deductibles and premiums climbed. And brokers, as the face of the industry to the client, bore the brunt of their frustration, explained Yusuf.

“If we’re renewing a policy that has been forced to rise from $5,000 to $30,000, we end up on the tail end of an understandably frustrated customer. And those conditions have just been exacerbated as a result of COVID-19, where everything’s gotten so much more expensive,” he said.

Valerie Guilbault, director of operations at AA Munro Insurance Brokers Inc., in Lower Sackville, N.S., said the fact that only 64% of business respondents and 50% of personal clients agreed brokers offered a wide variety of options and choice might reflect a lack of understanding about what is available to brokers under today’s conditions.

“One of the reasons why brokers do not offer a wide variety of choices is because of the hard market conditions. It has become difficult to place a risk that does not fall under the very best underwriting conditions,” she explained.

 

Feature image by iStock.com/sesame