A steady hand through turbulent times

IN Partnership with

Trisura, a specialty insurance and surety provider, is promising consistency and reliability as markets battle multiple headwinds. Insurance Business talks to SVP Richard Grant

Could you describe your niche in the insurance market? What is your company philosophy, and, specifically, what do you feel makes you stand out from the competition? RG: Trisura was founded in Canada and specializes in underwriting surety, corporate insurance, fronting, and warranty products. Our philosophy is focused on providing brokers with a level of service and products that is a step above our competitors. We differentiate ourselves by our people – going above and beyond what is expected of us, whether that means creating innovative products and systems for our brokers and their clients, or simply picking up the phone during the pandemic and hard market. How have you transitioned to a hybrid or back-to-bricks-and-mortar model as we ease our way out of the pandemic? RG: Trisura continues to remain flexible as we near the end of the pandemic. Even before the pandemic Trisura had flexibility for our people. With offices opening across Canada, we continue to offer this flexibility to our team. Regardless of where we do our underwriting from, we look forward to visiting our brokers and their clients wherever they are.

Trisura Guarantee Insurance Company is a Canadian specialty insurance and surety provider. We create custom insurance solutions for a niche industry of corporate clients, through a select broker network. Founded in 2006 on the premise that the insurance business can be done better, Trisura focuses on exceptional service for all our partners. Trisura Guarantee Insurance Company is a subsidiary of Trisura Group Ltd., a leading international specialty insurance provider. Trisura Group Ltd. has three principal regulated subsidiaries: Trisura Guarantee Insurance Company, Trisura International Insurance Ltd., and Trisura Insurance Company. Trisura has offices across Canada and the US. Trisura Group Ltd. is listed on the Toronto Stock Exchange under the symbol TSU.

Find out more

“We differentiate ourselves by our people going above and beyond what is expected of us”

Richard Grant, senior vice president, Surety

Despite all the challenges that the construction industry faced during the pandemic, the surety market has not experienced a hardening – in fact, quite the opposite. Insolvency rates dropped from normal levels during the pandemic, and the Canadian surety market experienced exceptional returns. With the current economic headwinds, which have been well publicized, business and credit challenges could potentially lead to the surety market hardening. Regardless, Trisura will continue to approach the business with our consistent underwriting approach. How have labour and supply shortages affected your business and your insureds? RG: Labour shortages and supply-chain challenges continue to affect all businesses and individuals, as does the rising interest-rate environment. With regard to surety, supply and labour challenges have driven up input costs in the construction industry, which has significantly inflated construction costs on new projects and affected profit margins on existing projects. During the pandemic, these issues were mitigated or masked by government stimulus such as wage subsidies.

How will inflationary concerns influence your business in the near future? RG: Inflation does bring with it many additional risks for our industry and insureds. Increasing costs will stress the profitability of many insureds, causing them to raise their pricing. For the insurance industry, this will lead to an increase in premiums, as many products and services are rated based on the revenues of our insureds. In addition, inflated loss costs will pressure rate increases. For our surety clients, Trisura will continue to work with our brokers and their clients in providing advice on insulating their business and balance sheets and stress-testing their operations against the challenges of a tighter credit environment, and higher interest rates and costs.

Various other factors have affected the construction industry, including strikes, shipment delays, and staff shortages due to COVID. How has this played out for you in your overall business objectives and those of your insureds? RG: During the pandemic, the construction industry was fortunate, as it was deemed an essential service, with projects remaining open and project owners being very patient and understanding with shipment delays and staff shortages due to COVID-19. Government subsidies were also a significant benefit. Now that we are exiting the lockdowns of the pandemic, all these factors continue to exist, but now we are in an escalated interest-rate environment. Trisura will continue to advise our brokers and their clients to guide them through these turbulent times. What economic climate do you think we will be facing rounding out the end of 2022 and into 2023? Do you think that inflationary concerns will still take centre stage, and will there still be labour and supply shortages to take into consideration, in your opinion? RG: Yes, the same headwinds we are facing today will likely continue to the end of 2022 and into 2023, but it is hard to forecast how central banks will continue to respond with interest rates. Many economists predict we’ll be walking a tightrope between very low growth and a recession, and that it will be 2024 before we see an improvement.

EXPERT ADVICE

SPECIALTY

BEST INSURANCE

RESOURCES

RISK MANAGEMENT

LIFE

NEWS

Key Media

Insurance Business America

Insurance Business Australia

Wealth Professional Canada

People

Terms & conditions

Conditions of use

About us

RSS

Asia

expert advice

specialty

Best Insurance

Resources

RISK MANAGEMENT

life

News

People

Terms & conditions

Conditions of use

About us

RSS

Asia

expert advice

specialty

Best Insurance

Resources

RISK MANAGEMENT

life

News

People

Terms & conditions

Conditions of use

About us

RSS

Asia

Economic value of surety bonds

A non-bonded construction enterprise is

10 times more

likely to become insolvent than bonded companies

for every $1 million of premium paid on public infrastructure

$3.5 million of GDP

In the current stable construction environment, with microscopic interest rates and insolvencies at a 35-year low, surety bonds protect

for every $1 million in premium paid

$25 million

In the early 1990s, when the rate of construction insolvencies spiked to six times their current levels, surety bonds protected approximately

for every $1 million in premium paid

25 full-time jobs or $1.5 million in wages

Under current economic conditions, surety bonds will protect approximately

Source: Surety Association of Canada: ‘The Economic Value of Surety Bonds in Canada’

Given a hardened market over the last two years, what have you focused on that has helped your overall business model? RG: Our focus over the past few years has been continuing to support our brokers with a consistent underwriting approach and a step-above service that our broker partners can rely on. While many markets in our lines of business have pulled back or withdrawn capacity from the market, Trisura has maintained its underwriting approach and leaned into the market by partnering with our brokers, which has resulted in increased market share. At the beginning of the pandemic, we witnessed several markets, both surety and insurance, stop writing new business. At Trisura, we made a conscious decision to continue supporting our brokers and their clients as we navigated the uncharted waters of the pandemic.

What is a surety bond?

is a form of financial credit known as a bond guarantee. The transaction always involves three parties: the obligee, the principal, and the surety. A surety bond protects the obligee (the party to whom the bond is paid in the event of a default) against losses, up to the limit of the bond, that result from the principal’s (the party with the guaranteed obligation) failure to perform its obligation. The surety, for example an insurance company, assumes the obligation if the principal cannot. The two most common types of surety bonds are contract surety and commercial surety.

Surety

n. (sur·e·ty)

“With regard to surety, supply and labour challenges have driven up input costs in the construction industry, which has significantly inflated construction costs on new projects and affected profit margins on existing projects.”

Richard Grant, senior vice president, Surety

Source: Surety Association of Canada: ‘The Economic Value of Surety Bonds in Canada’

for every $1 million in premium paid

25 full-time jobs or $1.5 million in wages

Under current economic conditions, surety bonds will protect approximately

for every $1 million in premium paid

$25 million

In the early 1990s, when the rate of construction insolvencies spiked to six times their current levels, surety bonds protected approximately

for every $1 million of premium paid on public infrastructure

$3.5 million of GDP

In the current stable construction environment, with microscopic interest rates and insolvencies at a 35-year low, surety bonds protect

likely to become insolvent than bonded companies

10 times more

A non-bonded construction enterprise is

Economic value of surety bonds

Richard Grant, senior vice president, Surety