Commercial specialty lines showing unexpected softening

Commercial specialty lines are witnessing a softening market — but in some lines of business that may come as a surprise.

Canadian Underwriter has heard over the past couple of years that cyber and D&O (directors’ and officers’) insurance has been softening. But in addition to cyber, transportation, hospitality and roofing markets are also seeing softening, Randy Carroll, chief executive officer at Ai Insurance Organization Inc., tells CU.

“I see more movement for sure in what I would call specialty lines,” Carroll says. “Transportation used to be one that was under fire, depending especially on the province that you’re working in, but transportation is starting to soften up a little bit.”

For brokers he works with on the transportation side, Carroll says, “I use this as a common line, ‘You’re one big loss away from a shift.’ You start to get some claims dollars on your books and things are starting to look the wrong way, then the adjustment comes and it comes in pretty fast and furious…”

Even cyber is a different market today than it was a year-and-a-half ago, Carroll says. “It’s easy to get access and the prices are coming down on a regular basis.”

CU has also heard that while the U.S. cyber market is hardening, cyber books in other jurisdictions are generally more profitable.

“The product is becoming more accessible to non-buyers, because the price point has been decreasing, and what we have seen is that this is helping to drive growth, drive demand,” James Burns, CFC’s global head of cyber, said last month during a webinar.

As for hospitality, the market is now seeing a lot of capacity, Caroll says, unlike during the COVID-19 pandemic. “Some of the players in the market from the insurer side that normally didn’t play in that space are a bit more aggressive today,” he says.

“And another one that has really taken a drastic change is the roofing market,” Carroll says. “The pricing structure on roofing has really lessened to a great percent, and availability.

“It’s a lot easier to get a roofing contractor insured than it was a year ago.”

Some of the sectors, like hospitality and transportation, have shifted from hard markets into soft ones. But Carroll says he doesn’t think you can ever explain the shift between a hard market and a soft market.

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“At least in the years that I’ve been [in the industry], I’ve never been able to figure it out. But for sure, you see these shifts happen, not frequently, but pretty much on a regular basis within our industry.

“Right now, it’s difficult for producers and brokers because you’re doing the best you possibly can to maintain the business and keep that business on your books, although at a lower premium,” Carroll adds. “But the harder challenge will be when the market shifts and the premiums start jumping up 20%, 30%, 40% again.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.