Coverage gaps on complex risks rarely announce themselves at the quote stage. They show up when a certificate is needed – or worse, when a claim hits.
That’s the pattern SPG Canada executive vice president Diana Charters (pictured) is seeing all too often, as contractual risk transfer accelerates and market conditions tempt everyone to focus on price first.
When brokers prioritize price over program design, essential policy details can be missed. Often, these issues only emerge when it’s too late to adjust coverage effectively.
“The challenge is that they often don’t surface until the broker goes to issue a certificate of insurance and finds the policy doesn’t line up with the contracts their client has already signed,” Charters explained. “By that point, the options for fixing it are limited.”
The construction sector highlights this misalignment clearly, as evolving project structures and contract language increase exposure for subcontractors and smaller trades.
“In the construction segment specifically, we’re seeing a growing issue around wrap‑up and course of construction programs,” she said. “Larger developers and general contractors are carrying significantly higher deductibles on these programs and contractually pushing responsibility for those deductibles down to their subcontractors in the event of a loss.”
On its face, that shift might sound like an internal project finance issue. In practice, it becomes a direct exposure for smaller trades and subcontractors – and, by extension, their brokers.
“That exposure can be addressed on the subcontractor’s CGL, but only if the broker has structured the limits correctly to reflect the client’s maximum contractual deductible exposure,” Charters explained. “Many aren’t because they don’t know the obligation exists until it’s too late.”
It’s a classic example of where program design needs to be anchored in contract review, not just in generic coverage comparisons.
Similar dynamics are emerging across other industries: larger firms use contract terms to limit their liability, transferring obligations downstream to smaller operators and subcontractors.
“More broadly across all segments, we’re seeing larger companies aggressively push liability down the contractual chain to limit their own exposure,” she said.
The downstream effect is that smaller companies – trades, subcontractors, smaller operators, etc. – are now being required to carry coverages and limits that would have previously only been expected of much larger, more sophisticated insureds, she noted.
These obligations often hide in contract details – indemnity clauses, hold harmless provisions, or shared deductibles. Brokers who miss them may deliver coverage that seems sufficient but leaves clients exposed.
“Their brokers don’t always recognize that shift or know how to structure a program to respond to it properly,” Charters noted. “That’s a gap we see consistently, and it’s getting wider as contract language becomes more aggressive.”
In this context, underwriters look for submissions that demonstrate the broker’s deep understanding of the client’s operations and contractual exposures.
“On complex risks specifically, the submissions that allow us to do our best work are the ones where we can tell a broker really knows their client – their operations, their exposures, the nuances of what they do,” Charters said.
A well-narrated submission isn’t just helpful to underwriters; it’s what allows insurers to provide not only competitive pricing but also the strongest terms and conditions, she added.
“When we have that context, we can genuinely advocate for the placement,” she explained. “When we’re working from a bare application, we have to underwrite conservatively, and that doesn’t serve anyone well.”
Charters also stresses that true value for complex clients comes from program design, not just price, especially as market conditions shift.
“The industry has gradually shifted toward a greater focus on price, and a softening market naturally accelerates that trend,” Charters said. “It’s an understandable dynamic as brokers are under real pressure to deliver value to their clients, and competitive premiums are a tangible way to demonstrate that.”
For complex clients, the measure of value is whether coverage aligns with contractual obligations, operations, and actual risk exposures.
Those clients have sophisticated exposures that really do benefit from purpose‑built policies, she said.
“Package policies with coverage extensions can be a great solution for the right risk, but for more complex operations, it’s worth taking the time to pressure test whether the coverage is genuinely fit for purpose.”
Coverage gaps don't show up on a premium comparison – they show up at the time of a claim.
“That’s the moment that defines the client relationship, and it’s the moment we’re all ultimately working to protect.”
