Underwriter Shortage

Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the CKOM business commentator. Joining me today, Colin Rooke, commercial risk reduction specialist with Butler Byers. Colin, this is going to sound a bit like a common refrain, but we have baby boomers retiring and not as many people coming up behind them in every silo or work category, and as a consequence, we’re starting to see shortages particularly of experienced people, but people just plain simple headcount in many job categories and insurance is not immune to this. You’ve got lots of veterans who are calling it a career and we don’t have the requisite number of people to replace them. Is that a fair observation?

Yeah, absolutely. There’s a lot of industries out there that are obviously struggling for people and insurance employs about 60,000 people across Canada. And just on the insurer side, actually, I’m not talking brokers or suppliers, and so certainly not immune. And we are inundated with articles about the shortage of claims handlers. And again, they’re not even in that 60,000, but there’s a lot of talk around commercial lines, underwriters, so very, very specific to commercial lines, underwriters. And not to take anything away from personal lines, but on the underwriting side. So not talking about your broker’s ability, but on the underwriting side, personal lines is easier to do and it’s easier because it’s more of a blanket approach. You can get quotes in a 5 to 10 questions answered and a lot of the information is already supplied. So commercial is particularly difficult. We’ve talked about our process, we’ve talked about our risk reduction workshops and our plans and the point of those plans.

So we can tell a story to the market. And the reason why we do that is because if you’re a commercial client that doesn’t fit into a very narrow box, a package, your account is going to be individually underwritten by an individual. And so that means a real human being is asking real questions. They’re putting in their own info into the system, their own take on the risk. They have questions they need answered, and the experience of the commercial underwriter is key because if they don’t know what questions to ask or if they don’t have experience in the industry, it’s not going to work out well for the client that we are submitting an application to. And so when you hear stats that eight, almost 9% of all commercial underwriting staff, or sorry, senior commercial underwriting staff intends to retire in the next three years and the mass exited over Covid at the senior level just saying, you know what?

It’s been a good career. We’re all working from home. I’m just going to call it a career. It is more important than ever that your submission, your story is told. The submission is top-notch. So we talk about top of stack submission, and that just means we present a client in a way that the underwriter wants to get to it first. And we do that simply because, and as evidenced by the fact that we are inundated with these articles, commercial lines, underwriters are out of time, they’re overworked, there
are new entrants into the industry, but you now have a 35, 40-year-old veteran trying to train someone who just joined no experience right out of school. They don’t have the time for the crap, they don’t have time for the subpar risks, I’ll say. And so you aren’t going to get what’s owed to you. There is no asking for a favour. These people are overworked. They were overworked throughout covid, and they’re overworked now. And your submission matters.

That’s a very valid point because it takes us to one of the underlying themes that we’ve had in this show over the past few years, which is when you are making an application to get commercial insurance coverage, it’s pretty straightforward when you’re in business, and this is who we’re talking to, business people here. So if you’re a business owner or a manager, listen up. You know how you prefer to deal with your favourite customers because they get what you’re doing. I mean, what you want to be is a better customer of the insurance company so that they will treat you better, give you better rates, give you better terms, whatever, answer your questions. And that the underwriter who you’re talking about, maybe we should just be clear about what that role is, but that’s the actual adjudicator who will field your application from your broker and make a decision about yes or no on coverage. And then if yes, here are the terms. Is that correct?

Absolutely. So they are the final say as to whether or not you get terms and insurance companies do not have to quote you. It is totally up to the underwriter.

So we’re back to that point of how do you become a better customer of your supplier of the insurance company? And we’ve argued on this program, and you most articulately of anyone I’ve ever heard, say, if you want good insurance coverage, give them a good story and give them the information. So make it easy for them to make a decision in your favour. And you’re saying right now they don’t have time to get a cup of coffee, never mind train the next generation. So they’re grumpy, they’re overworked, they’re probably not. They’re looking for the easy files. And how do we, what’s Butler Byer’s slogan “Insurance made easy”. Well, how do we make this easy? That’s your point here, I think.

Yeah, it’s a really good point. The easy file. And you have to say, okay, what is an easy file? So you’ve got one individual with 350 submissions all for the upcoming months sitting beside the desk, and they do have to siphon through, sift through and determine what are they going to work on? Well, how do we make your submission glow? And it’s the approach of we narrow down the markets to a very select view. We make personal phone calls to the market to say, we have this fantastic risk that we’re going to send your way. You have a few minutes to hear the backstory. And then we determine then and there if they want the risk. So already they’re looking for it. If they say I do, that means there is a ton of submissions that aren’t going to get a look.

And so we already have a leg up by having that conversation. Then we say, we are going to make your life easy. We’ve done a detailed assessment on the client and most of the questions you are going to have for us about where the client was, where they are now, where they’re going, all the factors that are going help you to determine whether or not you want this risk. It’s already been answered, it’s already been presented, we already know you’re interested. That’s how your submission stands out. And
unfortunately the rest remain. So if you’ve ever been through a traditional remarketing exercise and the broker says, we went to all your markets, but we only received three quotes, well, that broker could have 30, 40, 50, 60 contracts and it just means all the rest did not ever get to it because they never saw any incentive to do that.

You didn’t make it easy for them. Their files were the pile in their desk was too big. And they looked at it and said, that’s not an easy one. Too much work. I got too many others to do here. And so when you go back to market and you’re hoping to effectively remarket, and I’ll see if I can find a better rate from a different company, that’s getting harder to do when there’s fewer people that will actually have the capacity to take a look at your file or your application.

And that’s a really good point as well. So you’ve got new applications or you’ve got even a remarket and without additional info, the underwriters, they’ve all been burned thousands of times, thousands and thousands of times where they quote, and there’s no fish on the line, no new business. And frankly, our industry is really bad for never getting back to underwriters ever. So they send out a quote and you just go silent. And the underwriter knows, I guess I didn’t get it. And so you have overworked mid-market commercial underwriters that are saying, I’m already skeptical. Because often the quoting itself is an exercise to price check the existing market. And so again, you’re in this position where they may not put the effort in if you have the appropriate submission, if you have the appropriate story and the appropriate approach, you can explain why are we looking to move it, what went well, what didn’t go well, and why we think the new market is a better fit. And again, we’re adding excitement to the possibility of this prospect moving to that insurer, but the old way cannot work moving forward. There is such a talent gap in the middle. And again, certainly for mid-market. So larger enterprises, more than 50 employees, that type of thing, you might have operations in different provinces or one company that’s involved in different lines of business, US sales, international sales, that takes expertise. And so again, for those remaining in the industry that know what they’re doing, you have to make it easy for them.

Alright, Colin, we’ve got to take a break and I want to pick this up for just a minute or two after because you’ve left me with a couple more questions. You’re listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers, this is Risky Business. We’ll be back after this break.

Welcome back to Risky Business Commercial Insurance. Paul Martin here, your host. And joining me is Colin Rooke, the Commercial Risk Reduction specialist with Butler Byers. And just before we get off this topic, Colin, just a couple of thoughts that came from before the break that you left me with. I mean, we’re really in a situation where you’ve got a much tighter supply growing demand and you have to figure out how do I make myself look appealing enough that an underwriter who probably feels a little bit used anyway because you’re just price checking, how do I move to the top of the parade? One of the things you talk about is your step-by-step risk reduction plans and that this is a tool that’s for free to any business owner that contacts you, that you will give them the guide on how to actually fill out the forms and make themselves look more presentable.

Absolutely. And like I said, if you want the credits or discounts or to open up doors that previously weren’t open, you have to do more. You have to show the market what you are doing to become a better customer of the insurance market. Why are you a good risk? The forms, the submissions, the typical submission that the insurance companies generate themselves, so they generate the form and yet the form doesn’t work for them. But there’s no changes to the forms and they all do it. There’s not any one company, and it’s not the broker’s fault. I mean, they’re passing on the forms that were sent to them, but they don’t work. There’s not enough there. And when you’re overworked, you don’t have time to call the broker back and say, “Hey, Paul, the broker, I’m interested in this risk you’ve presented. But as you know, the forums don’t tell any of the story. Do you have time to go through with me?” They don’t have time to do that. They may want to. So you have to present it to them. It has to go to them or they’re not going to reach out.

Well, I guess it’s in the hands of the insurance buyer to be your own best friend here. I mean, do the work you can improve your chances, you’ll get a better outcome. And I suppose also, you’re listening to this and you’ve got kids that are graduating from high school and wondering about career options. Here’s a place where there’s shorter people.

Yeah, absolutely. They will train. It’s a great industry, especially if you love to travel. I mean, you could work anywhere in the world depending on the insurer and obviously I love it. But yeah, you’re right. Great point. If you’re listening to this or if you’re a parent with children, have a look. In fact, reach out to me. I can help connect you with insurers if anyone’s interested in a career in underwriting.

Yeah, my guess is high school guidance counsellors have probably not got this one on their list, so you have to get it from us here. Yeah, I agree. Anyway, listen, we’ve got four or five minutes left before we have to, we run out of time. And another topic I wanted to talk about, I think there was a report that came out the other day that sort of lists stolen vehicles and you’ve got that ranking, sort of one of the most vehicles most likely to be stolen. And yeah, it’s not really necessarily a commercial topic, but it’s an important one nonetheless.

So every year around this time that we get a summary of all the claims from the previous year. And if you’re wondering, okay, why am I discussing 2022 at the tail end of 2023? It’s because it can take that long to pay out the claims. So then they don’t have accurate data until the year is almost over. But it is funny. So I really like these stats, but if you drive and it gets very specific, so it’s not just a global, the Honda CRV, it gets right down to the year. But if you drive a 2022 Honda CRV, hopefully you’re parking in the garage because it’s the number one most stolen vehicle in Canada and there’s 5,620 of them, and that’s 1.2% of all CRVs of that year on the road were stolen. And so again, I don’t really have any great advice on what you can do, but I make sure you’re watching for those. But another really interesting statistic is, and they’re number eight on the list. So the way they’re ranked is overall amount, but I like the percentages. So if you have a 2020 Range Rover a Land Rover Range Rover 2020, 4% were stolen last year.

That a crazy, that’s a lot. That’s a lot. You’re standing around with a group of your Land Rover friends and you’re at some cars and coffee Land Rover Edition. Well, a lot of those are going to go missing in the year. And like I said, these stats are just kind of fun. A lot of Toyotas, a lot of Hondas. And another thing to note is each and every one of these vehicles can typically be stolen in under 15 seconds. I don’t know how they do it, but it takes about 15 seconds. So with these stats, with the most stolen cars, we also get. the least stolen cars. And really interesting, almost all of the least stolen cars are EVs, which I just find really interesting. Now, you could say, well, maybe there’s less on the road, but that can’t be it they, they’re clearly also hard to steal.

For example, the Chevrolet Volt was one of the least stolen vehicles in Canada, in fact, yeah, it was the least stolen vehicle in all of Canada. But Hyundai Ionic seven thefts, and that’s number nine. I think the Bolt had one in total. And so kind of neat that if you are driving an EV, I don’t know if that means you’re parking in the garage because you’re charging at home or the tech just, maybe there’s a mobilizer. The tech’s pretty good, but looks like you don’t want your car to go missing EV if you do drive a Jeep Wrangler, a Chevy Silverado, a Range Rover, Honda Civic, and certainly the CRV.

Well, I’m guessing that what do thieves do with these vehicles? They don’t just use ’em for a joy ride. They chop ’em and sell ’em to somebody who’s going to move them to Nigeria or flip ’em for parts or something. So there’s no market for parts for electric cars yet because there isn’t enough of them on the road. My guess is if you’ve got an EV, you’re probably going to see that increase as time goes by when there’s an end user form at the other end.

Good point. There’s less parts less to take out. Huge batteries, difficult to ship, way too heavy. So we have a really good point.

Well, Colin, I’m always intrigued by this stuff, and for a car guy, you probably enjoy these stats. They probably are something you look forward to, but I want to thank you for that and for the insights on where we are in terms of just HR and human resource support in the commercial insurance industry. It’s something that probably most of us don’t think about. You’ve been listening to Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. I’m Paul Martin, this is Risky Business. Thanks for joining us and we’ll talk to you next time.