Opportunities and obstacles in specialty insurance as the market hardens

Staying ahead of the curve on emerging risks and solutions is a strategy that’s worked for one major firm

Opportunities and obstacles in specialty insurance as the market hardens

Insurance News

By Alicja Grzadkowska

Opportunities in Canada’s specialty insurance space are plentiful, but they don’t come without their challenges. The legislative changes that came into effect in 2018 helped to lift certain lines of business, though other conditions in the marketplace have weighed down the other side of the scale.

“Cannabis has been a huge growth area for us in 2017, and 2018 in particular as it became legal recreationally,” said Jodie Kaufman Davis, corporate senior vice president, board member of H.W. Kaufman Group, and managing director of Burns & Wilcox Canada, which was already active in the cannabis arena when there was only a medicinal market in place. “We’ve already been building up a full product offering over the past several years, but now we’re actually able to put that product offering into place and we continue to go to a variety of seminars, meet with lawyers, stock exchanges, bankers, regulators, and anyone who’s really involved in industry. We want to make sure that we’re on top of it, and that we also provide that expertise to our brokers and to others in the industry by producing regular webinars.”

At the same time, as cyber risks increase, regulations around mandatory breach notifications in Canada become enforced, and more entities of all sizes look for cyber insurance and risk mitigation solutions – such as the Prince Township in Ontario, whose city council is deliberating on whether it could stretch its cyber insurance budget – this line is another area of opportunity for insurers.

“Every time there’s a breach, it brings more and more awareness to anyone from a small business owner to someone running a large publicly traded corporation, and therefore there’s more interest in our products and we continue to both deepen our expertise and expand our product offering,” said Kaufman Davis. “One of the unique things that we have at Burns & Wilcox is that we offer risk management from a cyber perspective. One of our products, BreachAware, for example, is a risk mitigation tool that works to help commercial clients better understand their exposure to data compromise,” monitoring and alerting companies to any suspicious activity as well as compromised assets, including usernames, passwords, and personally identifiable information.

“Cyber is not something new,” added Kaufman Davis. “We’ve been doing this for several years because we saw it coming, and we also have leveraged a lot of what we’ve seen in the US and brought it here. In the US, ever since the Target incident, which is now some years ago, there’s been a real focus on how to best protect businesses.”

Finding the right experts to grow lines like cyber and cannabis can nonetheless be difficult.

“A lot of the harder to place areas require specific deep expertise that’s not widely available,” explained Kaufman Davis, and that expertise is badly needed as opportunities in the MGA space continue to grow. “Because the market is hardening, there’s less capacity in general, in particular coming out of London, and, as a result, we’re seeing a lot more submissions. We want to be mindful of our ability to handle the large influx and, as a result, have changed some of our workflows to make sure that we can share the work, but also to make sure that we have the right expertise for what’s coming. We’re always looking for individuals to add to our team, and not only from a service perspective, but also those who provide specific expertise in an area, whether that’s marine, cannabis, property, personal lines, [or] cyber liability.”

Many Canadian insurance companies are, in fact, struggling with capacity. They used to turn to London when they needed more than what could be provided domestically, which is now less available as syndicates exit lines that have failed to deliver profitability.

“Certain classes of business have become more and more difficult to place, in particular many of [those] which we specialize in, including marine,” said Kaufman Davis.

Despite the hurdles, Burns & Wilcox’s Canadian operations are identifying other avenues of growth, including personal lines.

“We’ve been building our personal lines quite a bit, both here in Toronto and around the country, and have a lot of different products to offer both on the high value side as well as harder-to-place on the personal lines side. There’s a lot of opportunity to build up that portfolio of products as time progresses and it will be something we continue to focus on,” said Kaufman Davis.

How to best service clients is another area of focus. Burns & Wilcox is doing so by being ahead of the curve on emerging risks, and providing well-rounded solutions. Burns & Wilcox’s premium finance company Stonemark, which it acquired in 2018, launched in Canada in November – good news for cannabis clients since the MGA can now finance cannabis businesses as a privately owned company, whereas some banks are still not able to do so. Burns & Wilcox’s risk management and inspection company Afirm has meanwhile allowed the insurer to put together products with risk management components and add them to insurance offerings in Canada. Its claims service is likewise optimal for clients, particularly those in the marine space, as Burns & Wilcox can keep a lot of its work in-house under the Kaufman umbrella.

“Putting together solutions with our sister companies really shows our dedication to our clients and the service that we provide them,” said Kaufman Davis.

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