While the COVID-19 pandemic has thrown up countless challenges for insurers – business interruption lawsuits, coverage disputes, distressed clientele, economic hardship, to name but a few – the crisis has also opened up new opportunities for growth and development in certain product lines.
Cyber insurance is arguably one of the greatest benefactors of the pandemic. With the majority of Canadians working from home through the height of the public health crisis, both companies and individuals have started to realize the importance of cyber security.
Sheri Clay, director of private client services at JT Insurance Services Canada, commented: “On home insurance, one of the places where I see opportunities for growth would be in cyber. Most people don’t currently carry it, at least as far as our clients go, but there’s been a lot of new conversations about it. I think with more people working from their homes - and most of them don’t have the same cyber security as they would if they were using their computers in the office - there’s definitely more of a risk now. And then we also have the Internet of Things. More people have the Ring [video] doorbells, they’ve got the Amazon Echo, they’ve just got more connected devices in their homes, so their cyber exposure is higher.”
Connected to that, Clay also sees potential growth in equipment breakdown coverage. Most homeowners are unaware that in the event of a power surge, none of their appliances or home equipment would be covered under a standard homeowners’ policy. With more Canadians remote working, home schooling, and simply spending more time at home, a power outage could end up being problematic and costly.
“It’s not just that the pieces of equipment and technology are more expensive these days,” Clay added, “it’s that there are so many of them. Lots of people have [temperature] controlled flooring in their homes, they have connected wine coolers and other smart systems that they simply don’t realize would not be covered in the event of a power surge.”
On the commercial lines side, despite it being an area of contention, Joshua Krenus, president and CEO of Alteri Insurance Brokers in Vancouver, said he’s seen a significant uptick in queries around business interruption (BI) insurance. Even though the COVID-19 pandemic to a large extent has not been covered by existing BI insurance, businesses have started to realize that things outside of their control can shut businesses down for extended periods of time.
Another area of growth for Alteri during the pandemic has been health and travel – especially for newcomers to Canada. Krenus commented: “You’d obviously think health and travel business would plummet, but quite the opposite has happened, which was interesting. Our agent focuses more on newcomers to Canada, and so these people were backlogged for MSP (Medical Services Plan of British Columbia). When you don’t have MSP, you technically need travel insurance as a visitor to Canada, so our travel insurance business went up significantly.”
For the larger corporate clients, brokerage giant Aon has been focused on alternative risk solutions, especially for those companies taking the hardest financial hits from the pandemic.
Stéphane Lespérance, president of commercial risk and health solutions at Aon in Canada, explained: “Through the pandemic, particularly in the beginning, we had certain clients that were struggling with their own operations; they were trying to put forward good financials and looking for key differentiators to help them achieve their business goals. At Aon, we have a variety of solutions to provide them with this, whether they need retirement solutions, group insurance, or more traditional P&C solutions.
“Alternative risk transfer is very big for us now because most of our clients are large corporations, and they’re trying to retain the risk differently than they have before due to the current context [with COVID-19], and due to the hard market. They’re looking at ways to look at their retentions differently than they have before, so we’re putting forward modelling tools to support them in developing those solutions.”