Some see change as a challenge; others see it as an opportunity. Recent developments in the Canadian insurance marketplace have thrown up questions around rate adequacy, portfolio management and operational efficiency. The industry is being forced to find solutions for these challenges – and that’s where the sweet spot of opportunity lies.
Specialty insurers in Canada are in particularly strong stead to take advantage of some of these opportunities. Specialty markets are inherently focused on customized underwriting, tailor-made risk management and strategic distribution. They do the basics incredibly well, and in a tough market where insurers are having to deal with increasing frequency and severity of losses, strong basics are key.
“The specialty sector is a great place to be,” says Vince Rybinski, vice-president of national distribution and GSL specialty operations at RSA Canada. The insurer’s global specialty lines (GSL) unit is entering 2020 on the back of an extensive remediation effort focused around portfolio progression and customer retention.
“Our long-term vision and strategy revolve around sustainable growth and customer retention,” Rybinski says. “Specific to the specialty sector, we want to bring a holistic solution to the customer. When dealing with complex, riskmanaged multinational accounts, we need to go beyond the transaction. We need to position our broker partners and end customers so they can thrive in a changing risk landscape.”
The broker value-add
That holistic solution, which Rybinski says is a must in the specialty arena, starts with brokers’ customer engagement practices. There’s an opportunity for brokers to get closer to customers and be more proactive about renewals, level-setting expectations, introducing new coverage options and, most importantly, providing education and thought leadership about the changing risk landscape.
“Financial instability exists right now, and it’s not going away,” Rybinski says. “Together with our distribution partners, we need to do everything we can to provide thought leadership about best practices in this evolving marketplace. Staying close to the customer, being proactive and providing education are three key priorities. That’s what we mean by going beyond the transaction.”
Now’s the time for carriers, brokers and end customers to “come closer together,” Rybinski adds. As insurers increase their focus on operational efficiency, companies like RSA Canada are looking to align with broker partners who understand their direction and the emphasis they’re placing on education, proactivity and customer retention.
“We’re looking to build on the strength of some of our broker relationships so that we can really demonstrate what we’re trying to do in the specialty arena, which is to educate and prepare large risk-managed customers for the changing risk landscape,” Rybinski says. “We’ve enhanced our renewal process, ensuring that accounts are now being reviewed well in advance. In certain sectors, we do an annual review of each and every account to ensure everyone is clear on direction and understands and can articulate our strategy in the market. It’s all about getting in front of our portfolio and messaging accordingly.”
One prevailing risk in the changing risk landscape is extreme weather. It’s a huge concern for customers of all sizes but can lead to particularly substantial losses for large commercial accounts. While 2019 was free of named events like the 2013 Calgary floods or the 2016 Fort McMurray wildfires, an unprecedented number of extreme weather events led to significant catastrophe losses.
“As an industry, we need to recognize and invest in preventative measures that can offset those losses,” Rybinski says. “We also need to factor in the escalation of large losses in Canada, brought about by claims inflation and the fact that the cost of disaster recovery is exponentially higher than the cost of prevention.”
Bright future ahead
Despite some significant challenges in the Canadian insurance marketplace, the future looks bright for the specialty arena. The hardening market has pushed insurers like RSA Canada to rely more heavily on technical underwriting fundamentals, risk control and data analytics.
“Now more than ever, the value of the tripartite relationship is critical,” Rybinski says. “Customers, more than ever, can look to their brokers to provide insights into what’s happening in the market, and with our strong focus on insurance fundamentals, we can help brokers make those level-setting expectations. If we work together, we can weather the storm.”
Vince Rybinski, VP, National Distribution and Specialty Operations
This article originally appeared in Insurance Business Expert Advice