Sara, a commercial property insurance broker, had been employed in the insurance industry for 10 years, but this was her first experience with a hard market. For six months, she spent more time with each client explaining the price increases and reduced coverage. She had worked diligently finding extra credits or convincing clients to accept renewals based on their preferences. But she found herself overworked, handling renewals just a week before the expiry date. Her clients were unhappy and retention rates were dropping. When she asked management for help, she received no support. Everyone was feeling stretched, and this was becoming the new normal. Then one day while discussing a renewal with David, her underwriter, Sara thought she had found a solution. The underwriter was in a similar position. David was being pressured to maintain a high percentage of renewals, but the rates had increased 25% and some of the coverages were being reduced or not available on renewal. He mentioned that by issuing renewals by further reducing or eliminating coverages or limits, some of which had been added in the past years, Sara's clients would accept the renewals because the price would be like the last renewal. New business could be generated with lower limits as well. Their solution involved the underwriter reviewing the areas where there had been increases in claims over the past two years and the classes of business where there had been severity and frequency issues. If the area was low risk, the broker would issue a request to the underwriter for reduced limits on renewal. Sara prepared a form renewal letter for these clients with basic information. Sara and David marked these files for the future and intended to increase coverage when it was more affordable again. The broker and underwriter were careful not to apply the strategy for higher risk files or for those insureds who they knew carefully reviewed their renewals. They would spend time trying to place cover for these. Thus, Sara and David maintained good retention rates and even wrote new business. During this hard market, the clients were happy with the renewal and price, and the underwriter and broker received praise from their employers. Certainly, the solution was in everyone's best interest. Question 1 - What is an insurance hard market? Is Canada currently experiencing an insurance hard market? Question 2 - Referring to: 1977 CanLII 1182 (ON CA) | Fine's Flowers Ltd. et al. v. General Accident Assurance Co. of Canada et al. | CanLII After reviewing the Court of Appeal's decision in Fine Flowers, do you believe Sara (the broker) and David (the underwriter) behave lawfully with respect to renewing these property insurance policies? Question 3 - What is the difference between acting lawfully and acting ethically? In your opinion, are Sara (the broker) and David (the underwriter) behaving in an ethical manner? Why or why not? Question 4 - In your opinion, to what extent are Sara's clients responsible for ensuring that they have adequate coverage or limits on their property insurance policy renewal?