The hard market | What it means for the cost of insuring your business
Times are hard. Not only are are businesses pivoting but there’s uncertainty and tightness in the insurance marketplace. It’s costing more to buy commercial insurance for a Canadian business and that’s a trend that will likely continue for some time. A recent Canadian Underwriter article examines key causes and asks a Bermuda-based insurance executive what’s behind the current “hard market”. Citing more 11 consecutive quarters of rate increases impacting the market, the executive cites three key reasons why…
- “First(ly), we are dealing with an underlying social inflationary period that is putting pressure on prior year reserves and adds uncertainty to outlook.
- Second(ly), interest rates are about as low as they have ever been, creating substantial headwinds for investment income.
- And third(ly), it is our expectation that the effects of COVID-19 and its economic repercussions will be felt over a number of years.”1
And with the cost of commercial insurance going up, we’re getting asked the question “What coverages are going up the most and which ones aren’t going up?”.
Here’s what Canadian Underwriter finds:
“increases in professional lines, property, marine and liability lines, driven by new business and favourable rate changes, and partially offset by decreases in credit and political risk, and terrorism lines.”2CanadianUnderwriter.ca: Three reasons why the hard market may drag on for years
In addition to these coverages, there’s another area that is standing out as experiencing significant cost increases. Thankfully, the commercial insurance brokers here at ALIGNED have deep and strong relationships with more than 65 top Canadian insurance companies. Most importantly, even in the hard market, we can find options to fit your specific needs.
Keep reading to learn more about why costs are going up during the continuing hard market…
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The cost of risk | Reasons why your D&O insurance may be going up…
Lawsuits are becoming more frequent and payouts are increasing. These are two reasons why during the hard market, D&O liability coverage is becoming more costly to buy. Canadian Underwriter finds additional reasons why the cost of D&O is increasing.
For instance: “Industry-wide, D&O liability is a concern if the client is publicly-traded. This is because if a share price drops suddenly, directors and officers could be sued by shareholders alleging the firm misrepresented the true state of its financial affairs. Even if there was no misrepresentation, the cost of defending or settling such lawsuits would normally get picked up by its D&O liability insurer.”3CanadianUnderwriter.ca: Three reasons why the hard market may drag on for years
But D&O insurance isn’t optional coverage for Canadian directors and officers, it’s essential. This is because a D&O liability policy covers the directors and officers of public, private and non-profit companies who can be held personally liable for their actions.
More specifically, it protects your directors’ and officers’ personal assets in the event they are sued by customers, vendors as well as other third-parties for claims of a “wrongful act” that caused stakeholder losses.
And what’s known as a wrongful act can happen at any time. For example:
- Breach of duty by a director or officer
- Errors or omissions that led to financial losses
- Failure of an officer or director to comply with legal statutes or regulations – this does not include intentional criminal acts
- Misleading statements by a director or officer
- Failure to comply with the company’s by-laws or regulations
- Failure to act as a fiduciary
Whether your organization is publicly traded or a small private company D&O insurance should be considered an essential coverage when it comes to managing risk.
And if it’s a non-profit, you can buy your directors insurance 100% online right here on our website.
At ALIGNED, our commercial insurance experts know how to navigate the hard market and connect you with options for D&O coverage. Contact us now to find ways to manage the cost of risk.
Ways to save | When costs are going up, here’s how you can be proactive
Especially during the hard market, top and bottom lines matter. This is why it’s so important to be proactive when it comes to managing your insurance costs. When you are looking for ways to cut costs, we can help.
Here are three ways that you can take control of the cost of insurance during the hard market.
1. Change the insurance companies you work with
We know the market. Our relationships with the biggest insurance companies in Canada are strong and stable. We know how to find the best insurance company in Canada even during the hard market. And, most importantly, changing the insurance companies in Canada you work with is easier when you work with ALIGNED business insurance specialists.
2. Reconsider your business insurance coverage
Are you renewing your coverage and/or experiencing changing circumstances? Reassessing your needs can help reduce the cost of business insurance anywhere in Canada. An ALIGNED insurance broker can help audit your current insurance policy and uncover potential areas for cost savings.
3. Work with an ALIGNED insurance broker
Buying directly from insurance company or a broker who has a limited numbers of insurers can cost you a lot of time and money. Working directly with an ALIGNED insurance broker means that you are working with knowledgeable commercial insurance experts. This is because our business insurance brokers ensure the cost of business insurance and associated compensation for our brokerage is appropriate for the value being delivered.
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Worried about your insurance going up? We can help.
Times are hard and may get harder. We know that the cost of running your business is always on your mind. This is why we are hard at work advocating for our clients to find products, services and solutions that help manage the cost of insurance. And if reducing the cost of business insurance is on your mind, we are proud to offer premium financing solutions.
We’re here to help you find the BEST commercial insurance…
Our team of insurance brokers is available to help answer any and all questions you might have about all of our commercial insurance products. If you have a question about business insurance, are uncertain about what a particular insurance coverage term means, or simply want to find commercial insurance that directly aligns with your needs, don’t hesitate to call us toll-free at 1-866-287-0448.
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