The best way I can characterize the Canadian commercial and/or personal lines markets heading into 2025 is more of the same. We’re in a cyclical industry and cycles will continue, albeit perhaps shorter and more variable.
A brokerage, properly insulated by geography and its mix of business lines ought to manage the cycles. A brokerage needs a healthy blend of various lines to remain competitive, relevant, and to evolve and grow. Therein lies the challenge.
Client demands will feed the underwriting conditions in the high-net-worth personal lines space and the large, complex commercial lines segments. Each of these segments is of high importance to us; in both, clients’ expectations are increasing, and rate fatigue is quite noticeable. As brokers, our mantra is to be service providers rather than product sellers.
We need underwriting and claims handling consistency. In the large, complex commercial space, for example, we need risk appetite and pricing models to be consistent throughout the insurance company underwriting platforms. A quote from a company should be straightforward: it’s a quote reflecting the company’s risk appetite. It should not depend on where the specific office is located or the time of year. (I acknowledge this may be a challenge, given the underlying treaty and reinsurance renewal cycles). The point is that we need stability and consistency, especially as we forecast increasing pushback from clients and, as a result, more submission activities next year.
In the high-net-worth personal lines space, we need more current underwriting guidelines. They should be consistent and reflect the unique aspects of the underlying risk profiles. Certain companies want this business but they do not accommodate the circumstances of clients in this space.
More generally, the sub-limits being imposed in home and auto lines and the limitations of coverage on certain vehicle models are both perhaps necessary given the circumstances. But for how long? We are watching to see if overland water limitations lead to a lack of availability; or, if the product is still available, unreasonable pricing.
Overall, looking into 2025, we are concerned about rate fatigue resulting from the compounding effect of inflation and rate increases.
