In a corner of the commercial insurance market where risk is high and margins often thin, Banni Sodhi (pictured) is watching the terrain shift beneath her clients’ feet.
At KASE Insurance in Ontario, where Sodhi serves as a commercial insurance specialist, small business owners – from landscapers and construction crews to sewer maintenance contractors and demolition firms – are facing a convergence of cost pressures, compliance hurdles and climate uncertainty. Brokers, she said, need to act faster and think more strategically.
“It’s the difference between what a building was worth when the policy was set up, and what it would cost to replace today,” Sodhi said. “That gap can be huge.”
Most commercial property policies are structured on a replacement cost basis, but in today’s inflationary environment, those figures can quickly become outdated. For Sodhi, this makes the broker’s role not just transactional but consultative – ensuring that each year’s renewal reflects current realities.
Amid surging material and labor prices, the cost of rebuilding or replacing insured property can quickly outpace policy limits. Yet many small business clients are unaware that an outdated valuation could leave them underinsured in the event of a claim.
“That’s why pre-renewal reviews are essential,” Sodhi said. “Brokers need to make sure limits are up to date – every year.”
Without that, even a well-written policy may not respond as intended. And with insurers still adjusting to broader economic conditions, some have yet to revise their underwriting assumptions in line with inflation trends.
While British Columbia and parts of the US have seen insurers exit certain perils entirely, the Ontario commercial insurance market has remained relatively stable – for now. Still, climate volatility is leaving its mark.
“Extreme weather is affecting insurers and reinsurers industry-wide,” Sodhi said. “We’re seeing more limitations around water-related claims, especially if properties haven’t been updated.”
This means small business owners – particularly those with aging buildings – should be reviewing exclusions, deductibles and structural update requirements with care. “Clients can’t afford surprises when they go to file a claim,” she said.
The Canadian commercial insurance market is shifting from the hardened conditions seen during the pandemic. Rates are beginning to fall, and insurers are reopening their appetite for higher-risk business.
“We’re coming out of that hard market,” Sodhi said. “It’s more of a soft market now, and some products that were expensive or unavailable are more accessible.”
That makes early market engagement critical. Sodhi recommends brokers start renewal discussions sooner and test the market to secure better pricing or expanded terms. “It’s a good time to shop around,” she said.
Many high-risk small businesses, particularly in construction, logistics and contracting, continue to struggle with cash flow volatility. Brokers, Sodhi believes, can help – not just by finding cheaper rates but by introducing policies that improve liquidity.
“Trade credit insurance is a good example,” she said. “It helps clients access more capital by insuring their receivables. A lot of businesses don’t know it’s even an option.”
As insurers become more competitive, brokers have greater flexibility to build coverage that fits clients’ financial realities – without compromising protection.
Tighter regulations in sectors like trucking and heavy construction are influencing how carriers assess risk. But according to Sodhi, the added scrutiny may work in clients’ favour.
“Insurers actually feel more comfortable writing coverage when there’s strong compliance,” she said. “If a client has documented internal processes and is aligned with regulations, it can help reduce premiums or expand eligibility.”
Still, many carriers are slow to adapt their product offerings to industry-specific needs. Brokers need to bridge that gap by identifying where existing coverage may fall short – and by sourcing from specialty markets when necessary.
For businesses involved in snow removal, sewer work or demolition, layered commercial insurance programs are often essential. Bundling auto and general liability can streamline administration, but it’s not always the most cost-effective approach.
“One market might be competitive on liability but not on auto,” Sodhi said. “Sometimes separating policies gets the client better pricing or higher limits.”
That’s especially relevant when primary carriers cap their coverage – for example, at a $2 million commercial general liability limit. In those cases, brokers turn to umbrella or excess liability markets to extend protection.
In a softening market, it might be tempting for clients to chase the lowest premium. But Sodhi cautions that the broker’s responsibility goes beyond price shopping.
“Our job is to educate clients,” she said. “To show them where coverage might be lacking – and where it can be strengthened.”
For high-risk small businesses navigating an unpredictable risk landscape, that kind of guidance isn’t just helpful. It’s essential.
