Higher Risk needs better Risk Assessment

With winter now in full swing, snow removal is riskier than ever.  Insurance costs continue to increase due to an increase in frequency and severity of slip-and-fall lawsuits, where insurers are on the hook to fund the defence against more frequent lawsuits. 
   
Personal injury lawsuits have increased dramatically in recent years, especially in Ontario, where personal injury law firms have been working on a contingency basis, which means that lawyers agree to only receive payment if they win a settlement.

This has resulted in more injured parties taking their chances with personal injury claims, such as pursuing compensation after a slip or fall at an icy or snowy location and it has given personal injury lawyers more incentive to be aggressive and potentially seek higher damages.  Ontario has tried to remediate the issue by introducing new rules for personal injury lawyer contingency fee arrangements in July 2021. The province also passed new legislation in January, Bill 118, which cuts the amount of time that people have to file a personal injury claim from two-years to 60 days.

However, even if Bill 118 is successful in stemming the tsunami of personal injury claims being filed in the highly populated province, it will take some time for insurers to realize an impact and potentially readjust liability premiums accordingly.  Soaring insurance rates have not been isolated to liability insurance alone. Commercial insurance rates have been under “tremendous pressure” since 2019 and certain lines of business insurance remain very challenging to obtain coverage at reasonable prices.

For some of the high-risk sectors such as host liquor, landscaping, snow removal contractors, and roofing contractors, premium increases and lack of appetite among insurance carriers are creating difficulties for insurers accepting these risks. Much of this high-risk business, including liability coverage for snow removal contractors, is typically placed individually by managing general agents (MGAs) or through large programs. Some smaller high risks accounts are placed by brokers with smaller insurers that are not fully aware of the risks being accepted due to lack of risk assessment knowledge with brokers and underwriters.
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With the increased frequency and severity of losses, most insurers are finding it more difficult to renew polices because there’s been a huge focus by domestic and international insurers on profitability and the disposal of loss-making lines.  Loss-making accounts have been severely punished as most underwriters are super selective and capacity is tight.

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