Brokers still worry about the hard market, but what’s next?

Although Canadian property and casualty (P&C) insurance brokers still call the hard market their greatest challenge, their overall level of concern is gradually waning.

So found Canadian Underwriter’s 2023 National Broker Survey, in which more than 150 brokers nationwide expressed views about the state of the industry, including the strongest challenges facing the broker distribution channel. The survey, fielded in Feb. 2023, was made possible with the support of Sovereign Insurance.

In this year’s survey 66% of brokers called the hard market 2023’s primary worry. That’s 10% below 2022. Percentages aside, though, “The market being the way it is makes my job a lot harder and more stressful,” said a verbatim survey comment from a respondent with 16-plus years of experience.

Said another, “Our industry is facing increased challenges and after four years of [a] hard market…rate increases [and being] short-staffed, I’m tired.”

And, for brokers near retirement, the ongoing hard market could be the last straw.

“Business day-to-day has become extremely difficult,” said a broker at a large firm with 30-plus years of experience. “The demands of attracting, retaining and meeting the endless demands of people has become almost overwhelming. Combine this with the daily struggle of a hard market and it’s just not that much fun anymore.”

Just behind the hard market, 63% called talent acquisition and retention their top concern.

A verbatim from one respondent indicated labour issues are creating concerns about “meeting deadlines without sacrificing quality of work.” Another noted the situation is creating an “increased duty of care for brokers.”

One new challenge charting this year, 44% of respondents said economic issues, including inflation and interest rates, concerned them in 2023.

On a brighter note, the survey showed pre-pandemic broker worries about carriers growing their direct-to-consumer sales channels has waned. Just over half (51%) cited it as a top challenge in 2023, compared with 59% last year. Prior to COVID-19, worry over direct sales ranked highly for 62% of brokers in 2020 (that year’s survey was conducted before the pandemic was declared) and 63% in 2019.

But that doesn’t mean concerns have evaporated. One broker respondent at a large firm expressed worries about “carriers playing on both fields, broker channel and direct.” And another at a medium-sized firm decried what he called “self-interest and major service challenges from insurers.”

Insurance industry consolidation rounded out the Top 5 concerns. It remained statistically flat over the past five years — 48% cited it as a top concern in 2023, compared with 50% last year, 47% in 2021 and 46% in both 2020 and 2019.

Still, verbatim responses showed consolidation has created concerns about service quality. “As brokerages consolidate, no one cares about the insured,” said one broker.

And a female respondent who’s relatively new to the industry noted: “Insurance seems to cater more and more to big cities, leaving people in small towns and rural areas unable to keep up with expensive, fancy and unrealistic expectations for the way of life that comes with small towns and rural areas.”

Two challenges just outside the Top 5 illustrated the pandemic’s effect on proving the value of brokers. Only 40% of 2023 respondents said they viewed potential misrepresentation of the value of insurance brokers as a key worry.

That’s a drop from 48% last year and 55% in 2019. And only 39% of respondents called rapid technological change worrisome, down from 44% in 2022.

Taken alongside decreasing concerns about direct-to-consumer sales, the numbers suggest brokers see their clients expressing value for the human touch in their insurance transactions.

 

Feature image courtesy of iStock.com/sorbetto