OSPE - The Voice - Spring 2020 - 8

ADVOCACY IN ACTION

Strength
in
numbers

Breaking down the barriers
of a changing market

F

Written by Alison O'Rourke and Olivia Reed at BMS Group Ltd.
or months, insurance publications and
industry leaders have been communicating a
shift in market conditions. This is particularly
important to classes of professionals such
engineers and architects, who often directly
experience the impact of this change and subsequent increase
in costs and implications on coverage.
When Reactions Magazine asked why there had been
pricing increases across almost all insurance product lines in
the past 12 months, the President, North American Casualty
Division for Allied World Insurance Company said that the
pricing uptick was driven by the desire to survive and be
sustainable. A confluence of several factors has created these
conditions, including a decade of pricing that has not kept
pace with inflation, increased natural disasters and higher
jury awards, among others. As a result, many industry experts
have summarized this change as a shift from a historical soft,
or a hardening market.
For some, this market change is resulting in increases to
the cost of their liability insurance (professional liability as
well as commercial general liability/property), while others
have found themselves unable to access specific pieces of
insurance coverage that were historically readily available.
OSPE's program, as one of Canada's largest engineerdedicated insurance programs, collective scale and volume
is an invaluable asset to shield these external conditions and
maintain leading cost-effective and comprehensive liability
insurance solutions. In essence, the insurance program
remains in a strong and sustainable position attracting
new participants more than ever before who have been

8

THE VOICE Spring 2020

experiencing a spike in insurance costs outside the program.
Importantly, OSPE continues to work closely with its
insurance providers to ensure that the member program keeps
evolving, anticipating, and adapting to market changes as they
occur, while ensuring valuable industry leading solutions to
engineers in Ontario.
While insurance exists to pay claims, when there is a
continual increase in the frequency and severity of losses,
insurance companies may reduce capacity, or stop writing
a particular class of business altogether. The International
Risk Management Institute (IRMI) recently published a
blog post about the state of the market. "Once upon a time,
the insurance market cycled from hard to soft and back to
hard again in a pattern that was reasonably predictable-
about every 5 to 7 years. For the past 25 years or so, however,
there has been no discernible pattern, and soft [markets],
or buyers', markets typically last much longer than hard, or
sellers', markets. We recently entered a hard market for most
commercial lines of insurance, characterized by significant
increases in rates and reductions of coverage with much
tighter scrutiny by underwriters." This is what's happening
OSPE - The Voice - Spring 2020

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