A warning to insurers, and how COVID19 has changed the insurance landscape.
Listen to the full episode here, or read the full transcript below.
Paul Martin:
Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the business commentator on CKOM. Joining me as always, Colin Rooke, the commercial risk reduction specialist at Butler Byers. And we’re doing this in just complying with all the COVID rules. Colin, you’re at home. I’m at home. We’re not in a studio anywhere. We upgraded our own technology a bit so that we sound more like we’re in the studio, but we’re just doing what the officials ask us to do, stay at home, but proof you can do this stuff remotely and virtually.
We’ve been talking for months now, I guess, about probably three or four key themes in the show, and one of them has been the condition of the insurance market right now. That’s what you and the industry call a hard market, which is one where insurance companies are getting tougher, I guess, aren’t they? They’re harder to deal with. And that means your job as a broker and ultimately the job of the customer is getting more difficult as well. So that’s the theme of today’s show. Maybe any new angles?
Angle is the best way to describe it. Got any new angles on the story right now?
Colin Rooke:
Yeah. Thanks for the intro. Yeah. We’re back to primarily a recording from home due to cases, and I’ve got an eager 11 year old sitting beside me who’s trying to do his schoolwork, but wanted to listen to dad talk. The change in the market and we’ve talked quite a bit about the hard market and it’s not going. And I’m not trying to just repeat what’s already been said, but I do follow industry news. We discuss a lot of that on this show and then try and make it relevant by way of, okay, well, here’s the news, whether good or bad.
What can you do with it, or what can you do about it? What I wanted to talk about today is an article that… Basically it’s kind of a letter to the brokers from the insurers. We’re in a hard market, things are difficult to say the least for both brokers, insurance companies, and certainly our clients. And the message is pretty… It’s pretty loud and clear. They are saying, “Look, you have got to stop trying to save money for your clients by remarketing every account you have and sending it to every single insurance company there is or that you know of.”
And that is very accurate. That’s that is certainly what’s happening today. It’s been happening for probably nine months now, 10 months now, and it’s a knee-jerk reaction to increased prices, right? You say, “Okay. Well, insurance has been bought and sold a certain way for so long and the concern is if I have increased prices, maybe I’ll lose my client because they’re going to be unhappy with that, and they’re going to call another broker.” We’ve talked about tying up the market in the past. Sort of the old trick is block the markets.
If I reach them first, then Paul, you can’t go out and talk to them yourself. And the other issue too is rather than have the discussion around the state of the industry, and quite frankly, your clients and prospects’ role that they’ve had in that, it’s easier to say, “We’ll try and find cheaper pricing, cheaper pricing, cheaper pricing, and we’ll fight tooth and nail.”
Well, I got to tell you, if you’re in an industry where renewal terms are coming in at 40% increases, 50% increases, 60% increases and you spend hours and hours and hours surveying the market and you’re able to turn a 60% increase maybe down to a 58% increase, you’re really not winning that battle. I mean, the savings are minuscule at best. You’ve put a lot of work in, but you’ve also burned dozens and dozens and dozens of insurance companies in the process. I mean, this article basically says a note to the brokers that we are ignoring your submissions.
We know what you’re doing. We know that you are just pushing all this work onto us because you won’t have the tough conversations. We’re not interested in most or any of your accounts. They are getting ignored. And when we do quote them, we’re putting very little effort into it because your problem can’t be our problem. If you can’t have a tough conversation with your client, don’t expect us to be the one doing it for you. A word of caution to brokers, the shotgun approach, the peppering the market approach isn’t working.
Now, it’s not all bad news. The solution that they offer and it’s a solution or an approach that we’ve been using for quite a while, and for me and the reason why I wanted to talk about it on the show is it just validates a lot of the work we’re doing and the sort of the art of storytelling, picking your markets effectively, and approaching only those you know will be interested.
Paul Martin:
Peppering the market is the term you used that brokers are just… If they don’t like the story they hear from the incumbent, they just paste it out to everybody in sight and say, “Can you beat this?” How dramatic is that? I mean, how are the insurers feeling right now? Are they swamped, or is this just sort of crying wolf that don’t do this stuff?
Colin Rooke:
They are absolutely swamped. I mean, we see numbers that are so spread out, it’s really hard to cite anyone. But I would argue that the average underwriter is seeing more submissions per month than they would in normal times per year. And on our end, it’s very difficult to reach an underwriter. And you think, well, because prices are going up, are they just saying, “Well, we don’t have to impress the brokers to be… We’ll just ignore them.” No, there they are so inundated with requests. We have insurance companies that have…
They’ve had to draw a line in the sand. They’ll say, “Look, anything that crosses our desk needs to be 10,000 or more in premium or we won’t even look at it.” You want to send an office pack, a small office package to a specialty insurer? Just know our quote is $10,000. And if you’re okay with that, we’ll write it. But the thing is you don’t want them to get to that point. I mean, that’s a sad thing. What if that market is very good at a certain class of business and maybe would normally fall in the five, 6,000 premium range, for example?
Now they’re so inundated with everyone’s requests on lines of business that they don’t want to write. They don’t even want to see that. But now, they can’t even write the good risks, the ones that they are capable of writing. We’re now blocking ourselves from finding appropriate homes for our clients. And it gets worse. I mean, there’s a lot of businesses out there that are pretty straightforward, black and white, and they fit into a lot of boxes.
Well, you take that business, and again, you’re peppering it around and you’re annoying all these other underwriters globally, but then… They’re overworked. They’re frustrated. The workload never ends. I mean, they’re trying to take time off for the holidays, just like everyone else, but then you have a nontraditional risk. Some of that’s outside the box. If you look at your workload and you say, “I have 1,500 people that want me to quote their business. I may not get any of them at all.
And now I’ve got this outside the box that’s going to take some creative underwriting, some creative selling, some creative storytelling, I’ve got this in front of me.” You think they’re going to work on that? Not a chance.
Paul Martin:
It’s just the notion of basically giving you go away quotes because they’re swamped in a lot of cases. They just simply aren’t entertaining it. They’ve got too much on their plates, so they’re simply not going to give it a fair shake. And ultimately, it’s the client, your client, or the small business owner whose kind of left on the outside looking in on this. Colin, you’ve done a good job of painting the picture of the market today, the situation that you’re dealing with.
We got to take a little break. And when we come back, maybe we can talk about how you cope with all of these challenges that we’ve laid out in the first half of the show. You’re listening to Risky Business Commercial Insurance from Butler Byers. Back after this.
Welcome back to Risky Business Commercial Insurance from Butler Byers. Colin Rooke, the commercial risk reduction specialist with Butler Byers, is sitting in with us today, talking about the state of affairs in the market as we wind down towards the end of this calendar year. Colin, you’ve talked to at length really about a very challenging market right now. If you’re the buyer of insurance, I go to a broker such as you and I say, “Represent me in the market,” it’s really tough out there.
I’m finding premiums are going up, if I can even get the attention of somebody who will make me an offer of a premium, nevermind one that I find attractive. There’s got to be ways, though, to cope with this. I mean, what strategies are you deploying or saying to your customers, “This is what we have to do in order to get the attention of those people who are basically just trying to keep their head above water because there’s so much going on.”
Colin Rooke:
Yeah, great question. Inside this article, I mean, it validates what we have been saying on the show for five years. I mean, it says choose your markets. Go to one to three max. Get your story right. Be honest with the underwriter. Tell them what you’re doing. Tell them who else you’ve approached, if any. Explain the risk and explain why you chose that market.
And give them the assurance that if they can come through for you for whatever reason, it might be pricing, might be coverages, might be deductibles, but if they can come through for you, you’ll be placing the business with them. Suddenly you’ve got this diamond in the rough. This account that stands out among 1,500 other clients waiting for a knee-jerk quote. It’s you know what? That’s something to work on. Because even though we’re in a hard market, even though we’ve got COVID-19 to worry about, they still have a job to do.
They still have targets that must be hit. They still have to look at loss ratios. They still are required to write new business. The problem is how do you choose? And it’s something that we’ve done from the start. It’s something that we talk to all of our clients with. We do creative, personal selling. If you want someone to arbitrarily email over a hundred different insurance companies, and I’ll be honest, even as a broker, we don’t have time to go through a hundred quotes either. I mean, that’s just one client.
Now you’ve got 5,000 clients and you’re going to a hundred markets for all of them. The underwriter can’t go through it and give it proper attention. We can. And that’s why we say this company is perfect for you because they like what we do. They like the journey we’re on. We’re going to call them and say, “They’re with this market. We don’t feel it’s a good fit. Here’s the story. Here’s what we’ve done. Can you work with these people? If you do, you’ll get it.”
Paul Martin:
Sorry. You’ve always talked on the show about you need a plan. You need the story. You have to work with your client to actually craft a story. And that means you got to do some things so that you’ve got something to talk about. That’s the building of the plan thing. Is that a part of the defense mechanism in this marketplace?
Colin Rooke:
Yeah, absolutely. And I’ll use the hospitality industry as an example and I think I’ve done it before. However, the hospitality industry would be the hardest hit, in my opinion, from the insurance broker angle in Canada. You’ve got empty hotels. You’ve got restaurants at a third capacity, the increased costs of takeout services. You name it. And then on top of that, they would be one of the hardest hit when it comes to premium increases.
If you don’t have a three-year plan in place that’s going to show you are going from where you are now to great, it’s only going to get worse. In another article, sort of a plea by the insurance companies to the brokers, it says exactly that, that it’s only going to get worse if we aren’t working together to improve the risk. And if we aren’t having the tough conversations now with hospitality clients to get their head around this thing… There’s some great businesses out there. There’s some great claims, free incident, free accounts.
However, you got to think to yourself, if you’re listening right now, is that story being told? Because the industry thinks it’s doom and gloom. The industry thinks you’re not doing anything. The industry thinks you’re serving way more alcohol than you say you’re going to, and that people are driving home drunk. If we don’t address how are you going to avoid fires, how are you going to avoid liability claims, if we don’t have that knowledge, and they’re saying you’re going to have to tell that story for a long time before it’s even going to change, it’s big trouble.
Paul Martin:
On the other side of this, basically the insurance companies are doing this for a reason too. You make the point that they’ve got targets to hit. They’ve come through some really awful years. And for them, this is rebuilding the balance sheet and the treasury of their companies as well. So they do need to do business, but it’s not on the terms that it was five years ago.
Colin Rooke:
Absolutely. I mean, it’s really easy to forget that these are businesses themselves that are trying to turn a profit. They need to make money too. And if there isn’t money coming in, they don’t have any money to deploy to pay claims. And that’s what we have to get our head around. To pick on the hospitality again, if you don’t have a claim, great, but you know someone for sure that’s had astronomical claims. They all do. And then you think, okay, what if I took my premium and combined it with the person I know with astronomical claims.
Now, we have no claims, a lot of claims, combine the two, who would have won? I promise you, the insurance company lost. It’s everyone working together to say, if we want prices to decrease, if we want coverages to be broader, if we want more competition, we have to do something. Because right now there is no competition. It’s trying to find someone to take on. And not just hospitality, but certainly if you’re a challenging risk, there is no competition for your business. It’s begging. It’s begging to find a home versus who wants this, who wants their money.
That’s not the outlook today. You can turn it around, but you have to have a reason for them to look at you. You have to have a reason for them to believe.
Paul Martin:
Colin, you’ve always talked over the years of the step-by-step plans that your organization has built for pretty much any industry. People can get ahold of you. You will walk them through the step-by-step plan. These are the actual steps you need to take in order to make yourself now attractive to the insurance companies, as opposed to a pariah that they don’t even want to deal with, because you’re one of a bazillion that they’re looking at and you don’t stand out.
Colin Rooke:
Absolutely. And again, we start with a document. We record all that stuff. We make sure that our clients are aware of the story we are telling, why we are telling it, and what we’re doing to help. And you can see for yourselves. This is what we’re going to say. We’re not just going to pepper the industry. And again, it’s not possible for us to tell the story to a hundred different markets for 4,000, 5,000 different clients. We’ve got to be selective.
We have to say, “We want you to take this. Here is all the background work. Here’s what we’ve done. Here’s what they’ve done, and here’s why it’s a great risk, or it’s on its way to great.”
Paul Martin:
And then that becomes your job is crafting the story and how you make your client no longer look like just a single snowflake in a blizzard.
Colin Rooke:
Absolutely.
Paul Martin:
Colin, we’ve run out of time. As always, very insightful, very instructive. I know we’re headed into the holiday season and all of that, and we should probably be more upbeat in our conversations, but this is a reality that business owners have to deal with. Sometimes you do have to have the straight conversation. Thanks for being so upfront on this one. You’ve been listening to Colin Rooke, the commercial risk reduction specialist with Butler Byers. This is Risky Business. Join us again next time.
Captives
Colin and Paul talk about policy coverage during a pandemic and insurance captives.
Listen to the full episode here, or read the full transcript below.
Paul Martin:
Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the business commentator on CKOM. Joining me as always, Colin Rooke, the commercial risk reduction specialist at Butler Byers. And we’re doing this in just complying with all the COVID rules. Colin, you’re at home. I’m at home. We’re not in a studio anywhere. We upgraded our own technology a bit so that we sound more like we’re in the studio, but we’re just doing what the officials ask us to do, stay at home, but proof you can do this stuff remotely and virtually.
We’ve been talking for months now, I guess, about probably three or four key themes in the show, and one of them has been the condition of the insurance market right now. That’s what you and the industry call a hard market, which is one where insurance companies are getting tougher, I guess, aren’t they? They’re harder to deal with. And that means your job as a broker and ultimately the job of the customer is getting more difficult as well. So that’s the theme of today’s show. Maybe any new angles?
Angle is the best way to describe it. Got any new angles on the story right now?
Colin Rooke:
Yeah. Thanks for the intro. Yeah. We’re back to primarily a recording from home due to cases, and I’ve got an eager 11 year old sitting beside me who’s trying to do his schoolwork, but wanted to listen to dad talk. The change in the market and we’ve talked quite a bit about the hard market and it’s not going. And I’m not trying to just repeat what’s already been said, but I do follow industry news. We discuss a lot of that on this show and then try and make it relevant by way of, okay, well, here’s the news, whether good or bad.
What can you do with it, or what can you do about it? What I wanted to talk about today is an article that… Basically it’s kind of a letter to the brokers from the insurers. We’re in a hard market, things are difficult to say the least for both brokers, insurance companies, and certainly our clients. And the message is pretty… It’s pretty loud and clear. They are saying, “Look, you have got to stop trying to save money for your clients by remarketing every account you have and sending it to every single insurance company there is or that you know of.”
And that is very accurate. That’s that is certainly what’s happening today. It’s been happening for probably nine months now, 10 months now, and it’s a knee-jerk reaction to increased prices, right? You say, “Okay. Well, insurance has been bought and sold a certain way for so long and the concern is if I have increased prices, maybe I’ll lose my client because they’re going to be unhappy with that, and they’re going to call another broker.” We’ve talked about tying up the market in the past. Sort of the old trick is block the markets.
If I reach them first, then Paul, you can’t go out and talk to them yourself. And the other issue too is rather than have the discussion around the state of the industry, and quite frankly, your clients and prospects’ role that they’ve had in that, it’s easier to say, “We’ll try and find cheaper pricing, cheaper pricing, cheaper pricing, and we’ll fight tooth and nail.”
Well, I got to tell you, if you’re in an industry where renewal terms are coming in at 40% increases, 50% increases, 60% increases and you spend hours and hours and hours surveying the market and you’re able to turn a 60% increase maybe down to a 58% increase, you’re really not winning that battle. I mean, the savings are minuscule at best. You’ve put a lot of work in, but you’ve also burned dozens and dozens and dozens of insurance companies in the process. I mean, this article basically says a note to the brokers that we are ignoring your submissions.
We know what you’re doing. We know that you are just pushing all this work onto us because you won’t have the tough conversations. We’re not interested in most or any of your accounts. They are getting ignored. And when we do quote them, we’re putting very little effort into it because your problem can’t be our problem. If you can’t have a tough conversation with your client, don’t expect us to be the one doing it for you. A word of caution to brokers, the shotgun approach, the peppering the market approach isn’t working.
Now, it’s not all bad news. The solution that they offer and it’s a solution or an approach that we’ve been using for quite a while, and for me and the reason why I wanted to talk about it on the show is it just validates a lot of the work we’re doing and the sort of the art of storytelling, picking your markets effectively, and approaching only those you know will be interested.
Paul Martin:
Peppering the market is the term you used that brokers are just… If they don’t like the story they hear from the incumbent, they just paste it out to everybody in sight and say, “Can you beat this?” How dramatic is that? I mean, how are the insurers feeling right now? Are they swamped, or is this just sort of crying wolf that don’t do this stuff?
Colin Rooke:
They are absolutely swamped. I mean, we see numbers that are so spread out, it’s really hard to cite anyone. But I would argue that the average underwriter is seeing more submissions per month than they would in normal times per year. And on our end, it’s very difficult to reach an underwriter. And you think, well, because prices are going up, are they just saying, “Well, we don’t have to impress the brokers to be… We’ll just ignore them.” No, there they are so inundated with requests. We have insurance companies that have…
They’ve had to draw a line in the sand. They’ll say, “Look, anything that crosses our desk needs to be 10,000 or more in premium or we won’t even look at it.” You want to send an office pack, a small office package to a specialty insurer? Just know our quote is $10,000. And if you’re okay with that, we’ll write it. But the thing is you don’t want them to get to that point. I mean, that’s a sad thing. What if that market is very good at a certain class of business and maybe would normally fall in the five, 6,000 premium range, for example?
Now they’re so inundated with everyone’s requests on lines of business that they don’t want to write. They don’t even want to see that. But now, they can’t even write the good risks, the ones that they are capable of writing. We’re now blocking ourselves from finding appropriate homes for our clients. And it gets worse. I mean, there’s a lot of businesses out there that are pretty straightforward, black and white, and they fit into a lot of boxes.
Well, you take that business, and again, you’re peppering it around and you’re annoying all these other underwriters globally, but then… They’re overworked. They’re frustrated. The workload never ends. I mean, they’re trying to take time off for the holidays, just like everyone else, but then you have a nontraditional risk. Some of that’s outside the box. If you look at your workload and you say, “I have 1,500 people that want me to quote their business. I may not get any of them at all.
And now I’ve got this outside the box that’s going to take some creative underwriting, some creative selling, some creative storytelling, I’ve got this in front of me.” You think they’re going to work on that? Not a chance.
Paul Martin:
It’s just the notion of basically giving you go away quotes because they’re swamped in a lot of cases. They just simply aren’t entertaining it. They’ve got too much on their plates, so they’re simply not going to give it a fair shake. And ultimately, it’s the client, your client, or the small business owner whose kind of left on the outside looking in on this. Colin, you’ve done a good job of painting the picture of the market today, the situation that you’re dealing with.
We got to take a little break. And when we come back, maybe we can talk about how you cope with all of these challenges that we’ve laid out in the first half of the show. You’re listening to Risky Business Commercial Insurance from Butler Byers. Back after this.
Welcome back to Risky Business Commercial Insurance from Butler Byers. Colin Rooke, the commercial risk reduction specialist with Butler Byers, is sitting in with us today, talking about the state of affairs in the market as we wind down towards the end of this calendar year. Colin, you’ve talked to at length really about a very challenging market right now. If you’re the buyer of insurance, I go to a broker such as you and I say, “Represent me in the market,” it’s really tough out there.
I’m finding premiums are going up, if I can even get the attention of somebody who will make me an offer of a premium, nevermind one that I find attractive. There’s got to be ways, though, to cope with this. I mean, what strategies are you deploying or saying to your customers, “This is what we have to do in order to get the attention of those people who are basically just trying to keep their head above water because there’s so much going on.”
Colin Rooke:
Yeah, great question. Inside this article, I mean, it validates what we have been saying on the show for five years. I mean, it says choose your markets. Go to one to three max. Get your story right. Be honest with the underwriter. Tell them what you’re doing. Tell them who else you’ve approached, if any. Explain the risk and explain why you chose that market.
And give them the assurance that if they can come through for you for whatever reason, it might be pricing, might be coverages, might be deductibles, but if they can come through for you, you’ll be placing the business with them. Suddenly you’ve got this diamond in the rough. This account that stands out among 1,500 other clients waiting for a knee-jerk quote. It’s you know what? That’s something to work on. Because even though we’re in a hard market, even though we’ve got COVID-19 to worry about, they still have a job to do.
They still have targets that must be hit. They still have to look at loss ratios. They still are required to write new business. The problem is how do you choose? And it’s something that we’ve done from the start. It’s something that we talk to all of our clients with. We do creative, personal selling. If you want someone to arbitrarily email over a hundred different insurance companies, and I’ll be honest, even as a broker, we don’t have time to go through a hundred quotes either. I mean, that’s just one client.
Now you’ve got 5,000 clients and you’re going to a hundred markets for all of them. The underwriter can’t go through it and give it proper attention. We can. And that’s why we say this company is perfect for you because they like what we do. They like the journey we’re on. We’re going to call them and say, “They’re with this market. We don’t feel it’s a good fit. Here’s the story. Here’s what we’ve done. Can you work with these people? If you do, you’ll get it.”
Paul Martin:
Sorry. You’ve always talked on the show about you need a plan. You need the story. You have to work with your client to actually craft a story. And that means you got to do some things so that you’ve got something to talk about. That’s the building of the plan thing. Is that a part of the defense mechanism in this marketplace?
Colin Rooke:
Yeah, absolutely. And I’ll use the hospitality industry as an example and I think I’ve done it before. However, the hospitality industry would be the hardest hit, in my opinion, from the insurance broker angle in Canada. You’ve got empty hotels. You’ve got restaurants at a third capacity, the increased costs of takeout services. You name it. And then on top of that, they would be one of the hardest hit when it comes to premium increases.
If you don’t have a three-year plan in place that’s going to show you are going from where you are now to great, it’s only going to get worse. In another article, sort of a plea by the insurance companies to the brokers, it says exactly that, that it’s only going to get worse if we aren’t working together to improve the risk. And if we aren’t having the tough conversations now with hospitality clients to get their head around this thing… There’s some great businesses out there. There’s some great claims, free incident, free accounts.
However, you got to think to yourself, if you’re listening right now, is that story being told? Because the industry thinks it’s doom and gloom. The industry thinks you’re not doing anything. The industry thinks you’re serving way more alcohol than you say you’re going to, and that people are driving home drunk. If we don’t address how are you going to avoid fires, how are you going to avoid liability claims, if we don’t have that knowledge, and they’re saying you’re going to have to tell that story for a long time before it’s even going to change, it’s big trouble.
Paul Martin:
On the other side of this, basically the insurance companies are doing this for a reason too. You make the point that they’ve got targets to hit. They’ve come through some really awful years. And for them, this is rebuilding the balance sheet and the treasury of their companies as well. So they do need to do business, but it’s not on the terms that it was five years ago.
Colin Rooke:
Absolutely. I mean, it’s really easy to forget that these are businesses themselves that are trying to turn a profit. They need to make money too. And if there isn’t money coming in, they don’t have any money to deploy to pay claims. And that’s what we have to get our head around. To pick on the hospitality again, if you don’t have a claim, great, but you know someone for sure that’s had astronomical claims. They all do. And then you think, okay, what if I took my premium and combined it with the person I know with astronomical claims.
Now, we have no claims, a lot of claims, combine the two, who would have won? I promise you, the insurance company lost. It’s everyone working together to say, if we want prices to decrease, if we want coverages to be broader, if we want more competition, we have to do something. Because right now there is no competition. It’s trying to find someone to take on. And not just hospitality, but certainly if you’re a challenging risk, there is no competition for your business. It’s begging. It’s begging to find a home versus who wants this, who wants their money.
That’s not the outlook today. You can turn it around, but you have to have a reason for them to look at you. You have to have a reason for them to believe.
Paul Martin:
Colin, you’ve always talked over the years of the step-by-step plans that your organization has built for pretty much any industry. People can get ahold of you. You will walk them through the step-by-step plan. These are the actual steps you need to take in order to make yourself now attractive to the insurance companies, as opposed to a pariah that they don’t even want to deal with, because you’re one of a bazillion that they’re looking at and you don’t stand out.
Colin Rooke:
Absolutely. And again, we start with a document. We record all that stuff. We make sure that our clients are aware of the story we are telling, why we are telling it, and what we’re doing to help. And you can see for yourselves. This is what we’re going to say. We’re not just going to pepper the industry. And again, it’s not possible for us to tell the story to a hundred different markets for 4,000, 5,000 different clients. We’ve got to be selective.
We have to say, “We want you to take this. Here is all the background work. Here’s what we’ve done. Here’s what they’ve done, and here’s why it’s a great risk, or it’s on its way to great.”
Paul Martin:
And then that becomes your job is crafting the story and how you make your client no longer look like just a single snowflake in a blizzard.
Colin Rooke:
Absolutely.
Paul Martin:
Colin, we’ve run out of time. As always, very insightful, very instructive. I know we’re headed into the holiday season and all of that, and we should probably be more upbeat in our conversations, but this is a reality that business owners have to deal with. Sometimes you do have to have the straight conversation. Thanks for being so upfront on this one. You’ve been listening to Colin Rooke, the commercial risk reduction specialist with Butler Byers. This is Risky Business. Join us again next time.
Colin Rooke:
Exactly.
Paul Martin:
Colin, we’ve got to take a break and we’ll pick this up in just a minute.
You’re listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers. This is Risky Business, back after this break.
Welcome back to Risky Business Commercial Insurance with Butler Byers. Paul Martin here and joining me Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers Insurance.
Colin, before the break we were talking about sort of that knowledge gap, I guess we could say. Business owners incorrectly thought the business interruption would cover a pandemic. It doesn’t. And that’s probably triggering some anger and likely lawsuits and all of that kind of stuff, too. Right?
Colin Rooke:
It is. There’s a lot of different companies that are trying to look for gaps in the wording, or other interpretations of the definition of pandemic, certainly on the special events side of things, for example. If you think about it, globally, how many special events were canceled? And no coverage for pandemic on any policy that I’ve seen. And then just regular operations, whether you’re in the hospitality sector, or really anything, there are attempts to say… Well, one, we have a lot of clients putting in claims that even though we’re saying these will be denied, there’s a feeling that if there’s any sort of class action or intervention, I want to be first on the list of who gets paid. So there is that school of thought. And then certainly again, taking it upon yourself to say I’m going to take legal action and try and fight for the interpretation of the wording. You certainly hear about those in the media.
Paul Martin:
Yeah. But there’s the saying, one I’m very fond of, “A crisis is a terrible thing to waste.” So here we are in a crisis, and commercially there’s no getting around it. It is a crisis. I’m assuming that there are some novel thought processes going on. People are very creative and they look for answers and ways to, how do I cope with this crisis? And I’m assuming your industry’s no different. What are some of the quick thinkers talking about these days?
Colin Rooke:
One thing that’s coming up more often, and I want to caution against, it is the idea of insurance captives. So one, if you own your own insurance company, in theory, you could, and I’d probably argue you would, have a line of coverage for pandemic. And two, we are in this hard market, in the worst timing possible for business owners. However, premiums are going up through the roof. And so the captive insurance idea is being thrown around. There’s other agencies that are discussing captives that really have never brought that forward. There’s a lot of webinars. There’s a lot of talk. In theory, and again, we’ve talked about the insurance captive idea, in theory, it is a good idea. But it’s not for everyone. In fact, it’s not for most. It’s for very few.
And to say, “Hey, if you had your own insurance captive, and if you did, you could put the pandemic insurance in there and you would be laughing all the way to the bank right now” is wrong. Because if the whole insurance industry can’t support the potential BI claims, your captive wouldn’t either. You are the one collateralizing this captive. You’re putting the fronting money up and you’re holding it in reserve. And yes, you are buying re-insurance. But if the re-insurer won’t offer that line of coverage either, you’re still in the same boat. So if you say, “Okay. Well, I can’t reinsure it, but I’m going to set some money aside.” It wouldn’t have been enough.
And as an aside, just to sort of move away from business interruption, there’s a lot of talk about property coverages moving inside of an insurance captive. Right? Your building rate has doubled. Your contents rate has tripled. Property premiums are shooting through the roof, but there’s a reason for that. It’s claims. And we got there somehow. People are putting in claims. People are incurring losses. So to take a paint brush and say, all these people should have their own insurance company. Well, you’d find yourself with the same issue that the insurance industry is right now.
The most important component when considering insurance captive is your risk management strategy and your stance on risk, and your understanding of risk. And so, you can’t be part of the problem and think that a captive is a solution. You have to be the diamond in the rough. You have to have complete understanding of your responsibility around risk management and say, “I want to break away from the crowd. The crowd is costing me money. I’m not costing them money.” So to use this sort of a `paint brush approach, to say, “you should all look into it”, it wouldn’t help anybody.
Paul Martin:
In theory, if you own your own insurance company, the whole point of that exercise is to not pay out claims, right? You don’t build it to figure out a way to get a better way to get paid, because it doesn’t work that way.
Colin Rooke:
Exactly. And honestly, the formula is very, very simple as to whether or not you are a captive candidate. You look at the past 10 years. What have you paid in premiums? What have they paid you in claims? And then subtract about 40% for expenses, year over year, to run your own insurance company. And you look at the numbers and you say, “Would I have won that bet? Did I pay more than was paid back to me after expenses?” If it’s “yes, by a landslide”, start the conversation right now. If it’s close, don’t do it. And if you came out ahead, don’t even consider it until you have an iron clad risk management strategy in place. Risk is a primary focus inside the organization. You understand your exposures and you have a plan to mitigate those, eliminate them entirely.
Paul Martin:
Colin, we’ve got just under a minute left and so I’m going to ask you one quick question to kind of wrap this up, as it maybe puts a bow on our conversation today. The hard market that we’re in, is it a result of the COVID pandemic?
Colin Rooke:
No. It’s terrible timing, but has nothing to do with COVID. It has everything to do with claims incurred in 18 and 19, and being paid out in 20, and now into 21.
Paul Martin:
So that would have been things like hurricanes, wildfires, pick a topic.
Colin Rooke:
Exactly. Water losses, fire losses, nuclear liability claims. Exactly. That horrible timing, but not related.
Paul Martin:
Colin, very interesting. Thank you for your insights, as always. You’re always keeping us at the leading edge of thinking in your industry, and I think that’s really the point of the program here. So thanks for that.
You’ve been listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers. And this is Paul Martin. Thanks for joining us. Risky Business comes back next week.
Small Business Help
A lively discussion about starting a business and navigating those growing pains
Listen to the full episode here, or read the full transcript below.
Paul Martin:
Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the business commentator on CKOM. Joining me as always, Colin Rooke, the commercial risk reduction specialist at Butler Byers. And we’re doing this in just complying with all the COVID rules. Colin, you’re at home. I’m at home. We’re not in a studio anywhere. We upgraded our own technology a bit so that we sound more like we’re in the studio, but we’re just doing what the officials ask us to do, stay at home, but proof you can do this stuff remotely and virtually.
We’ve been talking for months now, I guess, about probably three or four key themes in the show, and one of them has been the condition of the insurance market right now. That’s what you and the industry call a hard market, which is one where insurance companies are getting tougher, I guess, aren’t they? They’re harder to deal with. And that means your job as a broker and ultimately the job of the customer is getting more difficult as well. So that’s the theme of today’s show. Maybe any new angles?
Angle is the best way to describe it. Got any new angles on the story right now?
Colin Rooke:
Yeah. Thanks for the intro. Yeah. We’re back to primarily a recording from home due to cases, and I’ve got an eager 11 year old sitting beside me who’s trying to do his schoolwork, but wanted to listen to dad talk. The change in the market and we’ve talked quite a bit about the hard market and it’s not going. And I’m not trying to just repeat what’s already been said, but I do follow industry news. We discuss a lot of that on this show and then try and make it relevant by way of, okay, well, here’s the news, whether good or bad.
What can you do with it, or what can you do about it? What I wanted to talk about today is an article that… Basically it’s kind of a letter to the brokers from the insurers. We’re in a hard market, things are difficult to say the least for both brokers, insurance companies, and certainly our clients. And the message is pretty… It’s pretty loud and clear. They are saying, “Look, you have got to stop trying to save money for your clients by remarketing every account you have and sending it to every single insurance company there is or that you know of.”
And that is very accurate. That’s that is certainly what’s happening today. It’s been happening for probably nine months now, 10 months now, and it’s a knee-jerk reaction to increased prices, right? You say, “Okay. Well, insurance has been bought and sold a certain way for so long and the concern is if I have increased prices, maybe I’ll lose my client because they’re going to be unhappy with that, and they’re going to call another broker.” We’ve talked about tying up the market in the past. Sort of the old trick is block the markets.
If I reach them first, then Paul, you can’t go out and talk to them yourself. And the other issue too is rather than have the discussion around the state of the industry, and quite frankly, your clients and prospects’ role that they’ve had in that, it’s easier to say, “We’ll try and find cheaper pricing, cheaper pricing, cheaper pricing, and we’ll fight tooth and nail.”
Well, I got to tell you, if you’re in an industry where renewal terms are coming in at 40% increases, 50% increases, 60% increases and you spend hours and hours and hours surveying the market and you’re able to turn a 60% increase maybe down to a 58% increase, you’re really not winning that battle. I mean, the savings are minuscule at best. You’ve put a lot of work in, but you’ve also burned dozens and dozens and dozens of insurance companies in the process. I mean, this article basically says a note to the brokers that we are ignoring your submissions.
We know what you’re doing. We know that you are just pushing all this work onto us because you won’t have the tough conversations. We’re not interested in most or any of your accounts. They are getting ignored. And when we do quote them, we’re putting very little effort into it because your problem can’t be our problem. If you can’t have a tough conversation with your client, don’t expect us to be the one doing it for you. A word of caution to brokers, the shotgun approach, the peppering the market approach isn’t working.
Now, it’s not all bad news. The solution that they offer and it’s a solution or an approach that we’ve been using for quite a while, and for me and the reason why I wanted to talk about it on the show is it just validates a lot of the work we’re doing and the sort of the art of storytelling, picking your markets effectively, and approaching only those you know will be interested.
Paul Martin:
Peppering the market is the term you used that brokers are just… If they don’t like the story they hear from the incumbent, they just paste it out to everybody in sight and say, “Can you beat this?” How dramatic is that? I mean, how are the insurers feeling right now? Are they swamped, or is this just sort of crying wolf that don’t do this stuff?
Colin Rooke:
They are absolutely swamped. I mean, we see numbers that are so spread out, it’s really hard to cite anyone. But I would argue that the average underwriter is seeing more submissions per month than they would in normal times per year. And on our end, it’s very difficult to reach an underwriter. And you think, well, because prices are going up, are they just saying, “Well, we don’t have to impress the brokers to be… We’ll just ignore them.” No, there they are so inundated with requests. We have insurance companies that have…
They’ve had to draw a line in the sand. They’ll say, “Look, anything that crosses our desk needs to be 10,000 or more in premium or we won’t even look at it.” You want to send an office pack, a small office package to a specialty insurer? Just know our quote is $10,000. And if you’re okay with that, we’ll write it. But the thing is you don’t want them to get to that point. I mean, that’s a sad thing. What if that market is very good at a certain class of business and maybe would normally fall in the five, 6,000 premium range, for example?
Now they’re so inundated with everyone’s requests on lines of business that they don’t want to write. They don’t even want to see that. But now, they can’t even write the good risks, the ones that they are capable of writing. We’re now blocking ourselves from finding appropriate homes for our clients. And it gets worse. I mean, there’s a lot of businesses out there that are pretty straightforward, black and white, and they fit into a lot of boxes.
Well, you take that business, and again, you’re peppering it around and you’re annoying all these other underwriters globally, but then… They’re overworked. They’re frustrated. The workload never ends. I mean, they’re trying to take time off for the holidays, just like everyone else, but then you have a nontraditional risk. Some of that’s outside the box. If you look at your workload and you say, “I have 1,500 people that want me to quote their business. I may not get any of them at all.
And now I’ve got this outside the box that’s going to take some creative underwriting, some creative selling, some creative storytelling, I’ve got this in front of me.” You think they’re going to work on that? Not a chance.
Paul Martin:
It’s just the notion of basically giving you go away quotes because they’re swamped in a lot of cases. They just simply aren’t entertaining it. They’ve got too much on their plates, so they’re simply not going to give it a fair shake. And ultimately, it’s the client, your client, or the small business owner whose kind of left on the outside looking in on this. Colin, you’ve done a good job of painting the picture of the market today, the situation that you’re dealing with.
We got to take a little break. And when we come back, maybe we can talk about how you cope with all of these challenges that we’ve laid out in the first half of the show. You’re listening to Risky Business Commercial Insurance from Butler Byers. Back after this.
Welcome back to Risky Business Commercial Insurance from Butler Byers. Colin Rooke, the commercial risk reduction specialist with Butler Byers, is sitting in with us today, talking about the state of affairs in the market as we wind down towards the end of this calendar year. Colin, you’ve talked to at length really about a very challenging market right now. If you’re the buyer of insurance, I go to a broker such as you and I say, “Represent me in the market,” it’s really tough out there.
I’m finding premiums are going up, if I can even get the attention of somebody who will make me an offer of a premium, nevermind one that I find attractive. There’s got to be ways, though, to cope with this. I mean, what strategies are you deploying or saying to your customers, “This is what we have to do in order to get the attention of those people who are basically just trying to keep their head above water because there’s so much going on.”
Colin Rooke:
Yeah, great question. Inside this article, I mean, it validates what we have been saying on the show for five years. I mean, it says choose your markets. Go to one to three max. Get your story right. Be honest with the underwriter. Tell them what you’re doing. Tell them who else you’ve approached, if any. Explain the risk and explain why you chose that market.
And give them the assurance that if they can come through for you for whatever reason, it might be pricing, might be coverages, might be deductibles, but if they can come through for you, you’ll be placing the business with them. Suddenly you’ve got this diamond in the rough. This account that stands out among 1,500 other clients waiting for a knee-jerk quote. It’s you know what? That’s something to work on. Because even though we’re in a hard market, even though we’ve got COVID-19 to worry about, they still have a job to do.
They still have targets that must be hit. They still have to look at loss ratios. They still are required to write new business. The problem is how do you choose? And it’s something that we’ve done from the start. It’s something that we talk to all of our clients with. We do creative, personal selling. If you want someone to arbitrarily email over a hundred different insurance companies, and I’ll be honest, even as a broker, we don’t have time to go through a hundred quotes either. I mean, that’s just one client.
Now you’ve got 5,000 clients and you’re going to a hundred markets for all of them. The underwriter can’t go through it and give it proper attention. We can. And that’s why we say this company is perfect for you because they like what we do. They like the journey we’re on. We’re going to call them and say, “They’re with this market. We don’t feel it’s a good fit. Here’s the story. Here’s what we’ve done. Can you work with these people? If you do, you’ll get it.”
Paul Martin:
Sorry. You’ve always talked on the show about you need a plan. You need the story. You have to work with your client to actually craft a story. And that means you got to do some things so that you’ve got something to talk about. That’s the building of the plan thing. Is that a part of the defense mechanism in this marketplace?
Colin Rooke:
Yeah, absolutely. And I’ll use the hospitality industry as an example and I think I’ve done it before. However, the hospitality industry would be the hardest hit, in my opinion, from the insurance broker angle in Canada. You’ve got empty hotels. You’ve got restaurants at a third capacity, the increased costs of takeout services. You name it. And then on top of that, they would be one of the hardest hit when it comes to premium increases.
If you don’t have a three-year plan in place that’s going to show you are going from where you are now to great, it’s only going to get worse. In another article, sort of a plea by the insurance companies to the brokers, it says exactly that, that it’s only going to get worse if we aren’t working together to improve the risk. And if we aren’t having the tough conversations now with hospitality clients to get their head around this thing… There’s some great businesses out there. There’s some great claims, free incident, free accounts.
However, you got to think to yourself, if you’re listening right now, is that story being told? Because the industry thinks it’s doom and gloom. The industry thinks you’re not doing anything. The industry thinks you’re serving way more alcohol than you say you’re going to, and that people are driving home drunk. If we don’t address how are you going to avoid fires, how are you going to avoid liability claims, if we don’t have that knowledge, and they’re saying you’re going to have to tell that story for a long time before it’s even going to change, it’s big trouble.
Paul Martin:
On the other side of this, basically the insurance companies are doing this for a reason too. You make the point that they’ve got targets to hit. They’ve come through some really awful years. And for them, this is rebuilding the balance sheet and the treasury of their companies as well. So they do need to do business, but it’s not on the terms that it was five years ago.
Colin Rooke:
Absolutely. I mean, it’s really easy to forget that these are businesses themselves that are trying to turn a profit. They need to make money too. And if there isn’t money coming in, they don’t have any money to deploy to pay claims. And that’s what we have to get our head around. To pick on the hospitality again, if you don’t have a claim, great, but you know someone for sure that’s had astronomical claims. They all do. And then you think, okay, what if I took my premium and combined it with the person I know with astronomical claims.
Now, we have no claims, a lot of claims, combine the two, who would have won? I promise you, the insurance company lost. It’s everyone working together to say, if we want prices to decrease, if we want coverages to be broader, if we want more competition, we have to do something. Because right now there is no competition. It’s trying to find someone to take on. And not just hospitality, but certainly if you’re a challenging risk, there is no competition for your business. It’s begging. It’s begging to find a home versus who wants this, who wants their money.
That’s not the outlook today. You can turn it around, but you have to have a reason for them to look at you. You have to have a reason for them to believe.
Paul Martin:
Colin, you’ve always talked over the years of the step-by-step plans that your organization has built for pretty much any industry. People can get ahold of you. You will walk them through the step-by-step plan. These are the actual steps you need to take in order to make yourself now attractive to the insurance companies, as opposed to a pariah that they don’t even want to deal with, because you’re one of a bazillion that they’re looking at and you don’t stand out.
Colin Rooke:
Absolutely. And again, we start with a document. We record all that stuff. We make sure that our clients are aware of the story we are telling, why we are telling it, and what we’re doing to help. And you can see for yourselves. This is what we’re going to say. We’re not just going to pepper the industry. And again, it’s not possible for us to tell the story to a hundred different markets for 4,000, 5,000 different clients. We’ve got to be selective.
We have to say, “We want you to take this. Here is all the background work. Here’s what we’ve done. Here’s what they’ve done, and here’s why it’s a great risk, or it’s on its way to great.”
Paul Martin:
And then that becomes your job is crafting the story and how you make your client no longer look like just a single snowflake in a blizzard.
Colin Rooke:
Absolutely.
Paul Martin:
Colin, we’ve run out of time. As always, very insightful, very instructive. I know we’re headed into the holiday season and all of that, and we should probably be more upbeat in our conversations, but this is a reality that business owners have to deal with. Sometimes you do have to have the straight conversation. Thanks for being so upfront on this one. You’ve been listening to Colin Rooke, the commercial risk reduction specialist with Butler Byers. This is Risky Business. Join us again next time.
Colin Rooke:
Exactly.
Colin Rooke:
It is. There’s a lot of different companies that are trying to look for gaps in the wording, or other interpretations of the definition of pandemic, certainly on the special events side of things, for example. If you think about it, globally, how many special events were canceled? And no coverage for pandemic on any policy that I’ve seen. And then just regular operations, whether you’re in the hospitality sector, or really anything, there are attempts to say… Well, one, we have a lot of clients putting in claims that even though we’re saying these will be denied, there’s a feeling that if there’s any sort of class action or intervention, I want to be first on the list of who gets paid. So there is that school of thought. And then certainly again, taking it upon yourself to say I’m going to take legal action and try and fight for the interpretation of the wording. You certainly hear about those in the media.
Paul Martin:
Yeah. But there’s the saying, one I’m very fond of, “A crisis is a terrible thing to waste.” So here we are in a crisis, and commercially there’s no getting around it. It is a crisis. I’m assuming that there are some novel thought processes going on. People are very creative and they look for answers and ways to, how do I cope with this crisis? And I’m assuming your industry’s no different. What are some of the quick thinkers talking about these days?
Colin Rooke:
One thing that’s coming up more often, and I want to caution against, it is the idea of insurance captives. So one, if you own your own insurance company, in theory, you could, and I’d probably argue you would, have a line of coverage for pandemic. And two, we are in this hard market, in the worst timing possible for business owners. However, premiums are going up through the roof. And so the captive insurance idea is being thrown around. There’s other agencies that are discussing captives that really have never brought that forward. There’s a lot of webinars. There’s a lot of talk. In theory, and again, we’ve talked about the insurance captive idea, in theory, it is a good idea. But it’s not for everyone. In fact, it’s not for most. It’s for very few.
And to say, “Hey, if you had your own insurance captive, and if you did, you could put the pandemic insurance in there and you would be laughing all the way to the bank right now” is wrong. Because if the whole insurance industry can’t support the potential BI claims, your captive wouldn’t either. You are the one collateralizing this captive. You’re putting the fronting money up and you’re holding it in reserve. And yes, you are buying re-insurance. But if the re-insurer won’t offer that line of coverage either, you’re still in the same boat. So if you say, “Okay. Well, I can’t reinsure it, but I’m going to set some money aside.” It wouldn’t have been enough.
And as an aside, just to sort of move away from business interruption, there’s a lot of talk about property coverages moving inside of an insurance captive. Right? Your building rate has doubled. Your contents rate has tripled. Property premiums are shooting through the roof, but there’s a reason for that. It’s claims. And we got there somehow. People are putting in claims. People are incurring losses. So to take a paint brush and say, all these people should have their own insurance company. Well, you’d find yourself with the same issue that the insurance industry is right now.
The most important component when considering insurance captive is your risk management strategy and your stance on risk, and your understanding of risk. And so, you can’t be part of the problem and think that a captive is a solution. You have to be the diamond in the rough. You have to have complete understanding of your responsibility around risk management and say, “I want to break away from the crowd. The crowd is costing me money. I’m not costing them money.” So to use this sort of a `paint brush approach, to say, “you should all look into it”, it wouldn’t help anybody.
Secure Data Management
Colin and Paul talk secure data management and company procedures, with Chris Yeo and Mitch Bernier from Professional Computer Services.
Listen to the full episode here, or read the full transcript below.
Paul Martin:
Welcome to Risky Business Commercial Insurance with Butler Byers. Paul Martin, here, your host as always, and joining me today, Colin Rooke the commercial risk reduction specialist with Butler Byers. And then we brought a couple of experts with us. We’re going to pick up our conversation about, well, all things computers and cybersecurity and COVID and work from home and all of those topics that come from enabling personnel to work remotely or to work in the office and really how you update things.
So, joining us as Chris Yeo and Mitch Bernier, they’re both with Professional Computer Services. And gentlemen, thank you for joining us again today. And Colin, maybe I’ll get you to step up to the mic first. When we had this conversation in a previous program, in the last program ,we were talking about, okay, COVID came, business went into crisis mode, we sent everybody home. It was kind of like, hurry up and just get it done. And now we’re six months into it. We kind of had time to digest this. We’re used to a little bit of it as it. From your perspective, what are the topics that you’re hearing about today that these guys need to be addressing for us?
Colin Rooke:
Yeah, this topic is important because a lot has changed in the last six months. And I think, part two of the show is timely. I think last show we talked primarily about, okay, everyone’s at home, we’re scrambling to get set up. We talked about internet connection. We talked about productivity investment in technology that if you’re using dated and sort of older equipment, maybe, the business owners aren’t really realizing that old equipment means delays and less productivity. We discussed that, and in fact, it was such a good discussion that we didn’t get to the, okay, fast forward to now, what does business look like moving forward and how do we need to adapt? What should be implemented? Are there areas in the IT space that now need a second look or maybe there’s companies out there that are really have ignored it, and now they’re at the point where they can’t.
But from our perspective, and certainly around cyber, any sort of cyber liability application or questions around it, but also general liability as well. What’s new is we’ve got insurers really asking about the company set up. Are we a hundred percent remote? Is it a 50/50? Or what kind of spread? Are you all back in the office? And then what has changed? What new protocols are in place? Do you have a pandemic plan, for example? How have you increased cyber security as a result of COVID-19. There’s questions around equipment that has been brought to the home, are you bringing it back? Are you scrubbing it or are you tossing it? That sort of thing.
We’ve got insurers really asking about the company set up.
Colin Rooke:
And then, it’s new to us. We haven’t had to answer these types of questions before, and I think it’s really important to have a conversation around what should be done. Do businesses need an IT audit? That’s going to bring them back to the sort of new COVID standards, really what should be done in this space?
Paul Martin:
All right, well, let’s bring our experts in and let them respond to that. Chris Yeo and Mitch Bernier from Professional Computer Services. Guys, I’ve got this saying that, “A crisis is a terrible thing to waste.” Because people are really motivated to adopt new ideas and to accept change when they’re in crisis mode. So, six months ago COVID hit the pandemic. Lockdown began, businesses panic. We moved home, we did all the things we needed to do. That crisis part I think is over. So, now what? What are business owners saying to you guys when they’re coming to your office? Or what questions are you fielding most frequently?
Chris Yeo:
Well, I think one of the things that are going on right now is businesses need to reevaluate where their data lives. How their staff are accessing it. And some of this comes down to security as well, because once you change where it lives at, you need to make sure it’s still secure. But each organization is going to be slightly different. At our office, we’re still only 40% working at our office for our workforce. I was talking to one of our customers today and they expect for the next six months that there’s going to be 75% working from home.
Businesses need to reevaluate where their data lives and how their staff are accessing it.
Chris Yeo:
So, in order to make that most effective, they need to evaluate, “This is what our it systems are doing for us now, is there ways that we can make this better?” And some of that can happen through a bit of an audit where you go where their IT provider or us would be able to go in and say, “Okay, well, this is what you’re doing now. This is some of the ways that you could make it easier, better for your staff and start moving that way.” Because right now, like you said, this is an opportunity for change.
Paul Martin:
Those numbers fascinate me because I think we probably thought, well, those things started to reopen back in July and it’s been gradually more and more as we’re moving along. That probably there was a perception that we would by now be kind of everybody getting back to the office. But you’re saying the opposite of that. That there’s a lot of organizations you’re talking to, as many as three quarters of their people are still at home.
Chris Yeo:
Yeah. I don’t foresee us going back the exact same way that we were six months ago. Not for maybe two years yet, because people are going back to school now. The kids are in school. They are going to be bringing potential COVID home. We can’t have that potential COVID come home and then have the parents go to the office and get everyone sick at the office. So, there are lots of organizations that are telling their staff, if you can still work from home, let’s keep you working from home. at the beginning of the pandemic, they talked about air quality. The air quality in New York increased substantially because people weren’t sitting in traffic driving. And, that isn’t something that gets talked about very much related to COVID is, there’s areas in the world where things are actually better because we’re not driving as much.
Paul Martin:
It does raise some, I guess, management challenges, if I can use that. So business is going to operate differently. I’m guessing that they’re asking people such as your organization, how do we cope with that? Even our own conversation, last show, we talked about just internet connectivity at home. Some that’s like, sort of 101. Now we’re in the 200 level class, which is, you’re saying where’s data living. What’s the 300 level class going to be? What are the big picture issues that business owners need to be asking themselves so that they can ensure that A, they’re productive, but B, they’re secure?
Chris Yeo:
Well, that is certainly a pretty big question because when you look at some cloud computing, you have to look at where the data resides in. And from a privacy point of view, the healthcare industry, well, everything basically that is not in the phone book, is covered by PIPEDA. And that basically, if you store your data outside of Canada, that data is not covered by that anymore. So, certain cloud providers don’t have cloud services in Canada. So, then your data, it could be access by people that shouldn’t have access to that. And that is a big concern and it should be a big concern for every company in Canada is where the data actually lives, if you’re putting it in the cloud.
Paul Martin:
Listen, that’s a very big topic and I want to dig into it a little bit, but we’ve got to take a break. So, if you’ll just hang with us for a minute, Chris, and we’re going to take a short break. You’re listening to Risky Business Commercial Insurance with Butler Byers. Back after this.
Welcome back to Risky Business Commercial Insurance with Butler Byers. Paul Martin here and joining us today, Colin Rooke the commercial risk reduction specialist with Butler Byers. And we brought in a couple of experts to provide us with some insight, Mitch Bernier and Chris Yeo from Professional Computer Services. And Chris, just before the break, you were talking about the sort of regulatory or legislative imperatives that come with this. There’s the whole notion of just finding a place to put your data. First, you have to decide who’s going to access it, and where am I going to store it at?
There’s the whole notion of just finding a place to put your data. First, you have to decide who’s going to access it, and where am I going to store it at?
Paul Martin:
Am I going to keep it in my office? Or am I going to use a sort of centralized cloud service? And then if I do that, I wonder how many business owners really understand PIPEDA, or the Privacy Act, and their obligations under that kind of legislation. Are you find yourself being a bit of a tutor on that topic?
Chris Yeo:
Yeah. We’ve talked to a number of our customers about this. There are some really odd requirements, depending on which legislation you’re looking at, between [Castle 00:11:35], between PIPEDA, between the health regulations. From a legal point of view, as a small business owner, if one of my staff is leaving and I’m going to forward that email or forward that person’s email to another person, if there is an email that comes in that is, let’s say, sensitive, whether it’s financial, health, whatever, and it gets forwarded to that other person. Well, Castle says you can’t forward that without the original person, one of the original people’s approval.
So, when you’re onboarding your staff, you should have a document that says, “If you leave, you should know that we are going to forward your email to someone else.” And that you agree to this. Because if that happens, technically through Castle, you are breaking the law. And then if you send somebody’s personal information, AKA health or financial, to somebody else, then, it is all sorts of trouble that you’re looking for.
Colin Rooke:
If I can interject, Paul-
Chris Yeo:
Yes, go ahead, Colin.
Colin Rooke:
…you mentioned do business owners understand this, and largely it’s no. And it’s complex, but I would say from my perspective, we spend a lot of time explaining what’s required, what the act means, the changes to that act. There’s certainly a lot of unknown. And then we’re talking about requirements around breach notification. We’re often told later on, “Oh, such and such happened six months ago, but it was fine that we handled it.” Of course our answer is, “Well, it doesn’t end there. You’ve got a duty to notify.” There’s steps you must take when there’s a breach. It’s no longer okay just to say it’s looked after. So, just want to interject with… I agree with Chris that there’s a lot of unknown.
Paul Martin:
Colin, while you’re at the microphone, maybe it just put this question to you. The purpose of the show, what we talk about is helping business owners navigate the world of getting insurance coverage. What are insurers saying about this topic that we’re talking about? They probably have some views as well.
Colin Rooke:
Yeah. So, cyber security continues to be a hot topic, and it is a weekly thing. There’s a lot of concerns around what companies are doing during COVID and then what will they continue to do, I don’t want to say post COVID, because I don’t see it going anywhere anytime soon. But, what’s the plan now? They’re concerned that, is there education being provided back to the what worked six months ago? The IT is set up for being in the office and, for the regular course of business and how you’ve always ran. And then, now we’ve had to upset that. The concern is, did you make the necessary changes? The remote access, is it secure?
How are you accessing? How many people are accessing? Has there been any advancements in cybersecurity, or do you plan for additional advancements? We’re getting asked a lot more often. I don’t want to say all the time, but certainly in certain classes of business, are you encrypting data? Why or why not? When will you? We’ll actually have terms will say, “We’ll renew this year subject to data encryption by such and such, or two factor authentication.” Previously, again, that was a wishlist. Now we’re saying, or now we’re hearing, it’s got to be done. So, I think it’s a really important time to talk to a company like Professional Computer Services to say, “I’m hearing about these requirements. I’m hearing there’s a lot of terms I don’t understand. I’m getting some questions that I may not know the answer to. Do I have the correct setup for now, but even into the future?”
It does include just connection, right? Productivity, engagement, but also either current or future compliance issues. So, if you think about it from the coverage perspective, if nothing’s done, we’re going to run into scenarios where businesses are struggling to find the coverage. Certainly around cyber security.
Chris Yeo:
And, Collin, I think that when you talk about education, I think education is going to be a key component for any cyber security piece. Your staff have to be able to recognize when somebody is trying to get information from them that they shouldn’t be giving. It happens way more than it should, where people will give usernames, passwords, birth dates, all sorts of things that you really shouldn’t be giving to somebody. And then a week later, their bank is phoning them to talk to them about their credit issues that they’ve got, because somebody has gone and has taken that information and utilized it to try and get credit.
Paul Martin:
If you think these guys are no good at it, they broke into CRA, right? That was one of the latest ones, but yeah. So…
Colin Rooke:
Yeah, that sort of it was like a landmark cyber breach, right? I would think that CRA has decent cybersecurity measures in place and look at the result. And so, if you’re not CRA, and I would argue that most businesses are below that level of security, then you are certainly at risk.
Paul Martin:
We’ve only got a few seconds left, but the topic there was a credential staffing, which is something we talked about on a previous program. So there’s the hardware piece, which you guys are helping us understand today, that sort of technology element. There’s also processes that business owners need to put in place so that their staff are actually taking advantage of best practices today, in terms of what you do just procedurally can help to protect the organization as well.
Gentlemen, I want to thank you as always. Time goes by very quickly in this, but this is the topic. We brought you back for a second show. No doubt that there’ll be more to talk about in the future. So, I look forward to the next time we have you back Chris Yeo, Mitch Bernier with a Professional Computer Services. Thank you very much for joining us, and Mitch, next time we’ll give you a chance to talk even. So, all right. And Colin Rooke, commercial risk reduction specialist with Butler Byers. You have been listening to Risky Business. Thanks for joining us. Talk to you next time.
Hard Markets – Part Two
Colin and Paul continue their discussion about hard markets, and what that means for you and your business.
Listen to the full episode here, or read the full transcript below.
Paul Martin:
Welcome to Risky Business Commercial Insurance with Butler Byers. Paul Martin, here, your host as always, and joining me today, Colin Rooke the commercial risk reduction specialist with Butler Byers. And then we brought a couple of experts with us. We’re going to pick up our conversation about, well, all things computers and cybersecurity and COVID and work from home and all of those topics that come from enabling personnel to work remotely or to work in the office and really how you update things.
So, joining us as Chris Yeo and Mitch Bernier, they’re both with Professional Computer Services. And gentlemen, thank you for joining us again today. And Colin, maybe I’ll get you to step up to the mic first. When we had this conversation in a previous program, in the last program ,we were talking about, okay, COVID came, business went into crisis mode, we sent everybody home. It was kind of like, hurry up and just get it done. And now we’re six months into it. We kind of had time to digest this. We’re used to a little bit of it as it. From your perspective, what are the topics that you’re hearing about today that these guys need to be addressing for us?
Colin Rooke:
Yeah, this topic is important because a lot has changed in the last six months. And I think, part two of the show is timely. I think last show we talked primarily about, okay, everyone’s at home, we’re scrambling to get set up. We talked about internet connection. We talked about productivity investment in technology that if you’re using dated and sort of older equipment, maybe, the business owners aren’t really realizing that old equipment means delays and less productivity. We discussed that, and in fact, it was such a good discussion that we didn’t get to the, okay, fast forward to now, what does business look like moving forward and how do we need to adapt? What should be implemented? Are there areas in the IT space that now need a second look or maybe there’s companies out there that are really have ignored it, and now they’re at the point where they can’t.
But from our perspective, and certainly around cyber, any sort of cyber liability application or questions around it, but also general liability as well. What’s new is we’ve got insurers really asking about the company set up. Are we a hundred percent remote? Is it a 50/50? Or what kind of spread? Are you all back in the office? And then what has changed? What new protocols are in place? Do you have a pandemic plan, for example? How have you increased cyber security as a result of COVID-19. There’s questions around equipment that has been brought to the home, are you bringing it back? Are you scrubbing it or are you tossing it? That sort of thing.
Paul Martin:
All right, well, let’s bring our experts in and let them respond to that. Chris Yeo and Mitch Bernier from Professional Computer Services. Guys, I’ve got this saying that, “A crisis is a terrible thing to waste.” Because people are really motivated to adopt new ideas and to accept change when they’re in crisis mode. So, six months ago COVID hit the pandemic. Lockdown began, businesses panic. We moved home, we did all the things we needed to do. That crisis part I think is over. So, now what? What are business owners saying to you guys when they’re coming to your office? Or what questions are you fielding most frequently?
Colin Rooke:
Yeah. So we talked about strategies as to why it’s not a great thing to shop every year. Underwriters are people. They have memories. They know that every single year I see Paul Martin, and every single year I’m unsuccessful with Paul Martin. So they get a bad taste in their mouth. Now, you magnify that and say, “I’m getting every single restaurant. I’m getting every single condo. I’m getting every single manufacturer.” And the patience is wearing thin.
And the problem is, what’s happening now is they’re at the point where they’re saying, “We will not even look at this.” And they’ll say, “We’re going to decline.” Or even worse, for those that shop around regularly, they’re saying, “We have seen this over the years. We haven’t been successful then. We are closing the file.” They’re not even willing to listen.
So you think about, okay, in a time where pricing is increasing everywhere for almost everyone, we’re going to use a strategy that’s really conducive to looking for lower pricing in a soft market, right? When you have dozens of competitors trying to undercut each other, trying to buy up business, that’s a strategy that could work. I mean, you can shop around and drive to the bottom. We’re in the opposite of that yet we’re using the same technique when prices are higher.
My point in all this is now is the most important time to have your story straight and save the marketing for a time when you have to. You might be with the market right now, and you might be a fantastic company. You might be claims free. It might be one of the most profitable accounts that your insurer has ever worked on. And you might get some bad news in the mail. They are not going to renew your policy, which happens every single day now.
So now you’re in a position where you must move. That is a time to look. That is a time to get your story straight. That is a time where you need to find someone, but now you’re up against hundreds, if not thousands, of other companies just plain looking, just plain poking, poking around, rendering it almost impossible to even have the underwriter allocate the appropriate amount of time to your account.
And I hate to pick on contractors, but when times are slower, the pricing is a lot more competitive. When times are busier, the cost drives up and there’s no harm in that. But that’s what we’re faced with now. You know what? I don’t have time to even look at this account properly, so I’ve got to price it at X. And that’s what’s happening. And then we’re getting into the position where companies are forced to take those terms.
Paul Martin:
Those numbers fascinate me because I think we probably thought, well, those things started to reopen back in July and it’s been gradually more and more as we’re moving along. That probably there was a perception that we would by now be kind of everybody getting back to the office. But you’re saying the opposite of that. That there’s a lot of organizations you’re talking to, as many as three quarters of their people are still at home.
Chris Yeo:
Yeah. I don’t foresee us going back the exact same way that we were six months ago. Not for maybe two years yet, because people are going back to school now. The kids are in school. They are going to be bringing potential COVID home. We can’t have that potential COVID come home and then have the parents go to the office and get everyone sick at the office. So, there are lots of organizations that are telling their staff, if you can still work from home, let’s keep you working from home. at the beginning of the pandemic, they talked about air quality. The air quality in New York increased substantially because people weren’t sitting in traffic driving. And, that isn’t something that gets talked about very much related to COVID is, there’s areas in the world where things are actually better because we’re not driving as much.
Paul Martin:
It does raise some, I guess, management challenges, if I can use that. So business is going to operate differently. I’m guessing that they’re asking people such as your organization, how do we cope with that? Even our own conversation, last show, we talked about just internet connectivity at home. Some that’s like, sort of 101. Now we’re in the 200 level class, which is, you’re saying where’s data living. What’s the 300 level class going to be? What are the big picture issues that business owners need to be asking themselves so that they can ensure that A, they’re productive, but B, they’re secure?
Chris Yeo:
Well, that is certainly a pretty big question because when you look at some cloud computing, you have to look at where the data resides in. And from a privacy point of view, the healthcare industry, well, everything basically that is not in the phone book, is covered by PIPEDA. And that basically, if you store your data outside of Canada, that data is not covered by that anymore. So, certain cloud providers don’t have cloud services in Canada. So, then your data, it could be access by people that shouldn’t have access to that. And that is a big concern and it should be a big concern for every company in Canada is where the data actually lives, if you’re putting it in the cloud.
Paul Martin:
Listen, that’s a very big topic and I want to dig into it a little bit, but we’ve got to take a break. So, if you’ll just hang with us for a minute, Chris, and we’re going to take a short break. You’re listening to Risky Business Commercial Insurance with Butler Byers. Back after this.
Welcome back to Risky Business Commercial Insurance with Butler Byers. Paul Martin here and joining us today, Colin Rooke the commercial risk reduction specialist with Butler Byers. And we brought in a couple of experts to provide us with some insight, Mitch Bernier and Chris Yeo from Professional Computer Services. And Chris, just before the break, you were talking about the sort of regulatory or legislative imperatives that come with this. There’s the whole notion of just finding a place to put your data. First, you have to decide who’s going to access it, and where am I going to store it at?
Chris Yeo:
Yeah. We’ve talked to a number of our customers about this. There are some really odd requirements, depending on which legislation you’re looking at, between [Castle 00:11:35], between PIPEDA, between the health regulations. From a legal point of view, as a small business owner, if one of my staff is leaving and I’m going to forward that email or forward that person’s email to another person, if there is an email that comes in that is, let’s say, sensitive, whether it’s financial, health, whatever, and it gets forwarded to that other person. Well, Castle says you can’t forward that without the original person, one of the original people’s approval.
So, when you’re onboarding your staff, you should have a document that says, “If you leave, you should know that we are going to forward your email to someone else.” And that you agree to this. Because if that happens, technically through Castle, you are breaking the law. And then if you send somebody’s personal information, AKA health or financial, to somebody else, then, it is all sorts of trouble that you’re looking for.
Paul Martin:
Colin, while you’re at the microphone, maybe it just put this question to you. The purpose of the show, what we talk about is helping business owners navigate the world of getting insurance coverage. What are insurers saying about this topic that we’re talking about? They probably have some views as well.
Colin Rooke:
Yeah. So, cyber security continues to be a hot topic, and it is a weekly thing. There’s a lot of concerns around what companies are doing during COVID and then what will they continue to do, I don’t want to say post COVID, because I don’t see it going anywhere anytime soon. But, what’s the plan now? They’re concerned that, is there education being provided back to the what worked six months ago? The IT is set up for being in the office and, for the regular course of business and how you’ve always ran. And then, now we’ve had to upset that. The concern is, did you make the necessary changes? The remote access, is it secure?
How are you accessing? How many people are accessing? Has there been any advancements in cybersecurity, or do you plan for additional advancements? We’re getting asked a lot more often. I don’t want to say all the time, but certainly in certain classes of business, are you encrypting data? Why or why not? When will you? We’ll actually have terms will say, “We’ll renew this year subject to data encryption by such and such, or two factor authentication.” Previously, again, that was a wishlist. Now we’re saying, or now we’re hearing, it’s got to be done. So, I think it’s a really important time to talk to a company like Professional Computer Services to say, “I’m hearing about these requirements. I’m hearing there’s a lot of terms I don’t understand. I’m getting some questions that I may not know the answer to. Do I have the correct setup for now, but even into the future?”
It does include just connection, right? Productivity, engagement, but also either current or future compliance issues. So, if you think about it from the coverage perspective, if nothing’s done, we’re going to run into scenarios where businesses are struggling to find the coverage. Certainly around cyber security.
Paul Martin:
If you think these guys are no good at it, they broke into CRA, right? That was one of the latest ones, but yeah. So…
Colin Rooke:
Yeah, that sort of it was like a landmark cyber breach, right? I would think that CRA has decent cybersecurity measures in place and look at the result. And so, if you’re not CRA, and I would argue that most businesses are below that level of security, then you are certainly at risk.
Paul Martin:
We’ve only got a few seconds left, but the topic there was a credential staffing, which is something we talked about on a previous program. So there’s the hardware piece, which you guys are helping us understand today, that sort of technology element. There’s also processes that business owners need to put in place so that their staff are actually taking advantage of best practices today, in terms of what you do just procedurally can help to protect the organization as well.
Gentlemen, I want to thank you as always. Time goes by very quickly in this, but this is the topic. We brought you back for a second show. No doubt that there’ll be more to talk about in the future. So, I look forward to the next time we have you back Chris Yeo, Mitch Bernier with a Professional Computer Services. Thank you very much for joining us, and Mitch, next time we’ll give you a chance to talk even. So, all right. And Colin Rooke, commercial risk reduction specialist with Butler Byers. You have been listening to Risky Business. Thanks for joining us. Talk to you next time.
Colin Rooke:
Absolutely. I need to hear the story you tell to other people. I need to hear the success tale. I need to know what got you. Where were you? Where are you now? And where are you going? That’s what’s going to sell the account, the way you think, the way you operate, not the value of the building. If you say, “Well, my building, Paul, is valued at four times the building as your building. That might imply I’m a bigger, better company to an underwriter.” That’s saying I’m going to have to write a check that’s four times larger for your building than I do with Paul’s. I’m a lot more comfortable with Paul’s building. It’s a smaller amount, smaller check, less risk.
Paul Martin:
And so this is about just chronicling the story of the business. And in a way you’re kind of like a business writer for The Globe and Mail here. You’re less of an insurance sales guy, if I could put it that way, and more of a business reporter. Really an interesting approach. And I’m guessing this story that you’ve been telling clients over the years, they’ve been less interested in hearing about this idea of yours until now. All of a sudden they’re starting to pay attention? And we really don’t have any time left to go into that, but I’m guessing that’s what you’re hearing.
Colin Rooke:
Colin, thank you. As always very insightful stuff. You’ve been listening to Colin Rooke, the commercial risk reduction specialist with Butler Byers Commercial Insurance. I’m Paul Martin. This is Risky Business. Thanks for joining us.