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There&rsquo;s a lot keeping business leaders up at night. Among the reasons are economic uncertainty, inflation, supply chain pressures, and rising operating costs, which are all pushing Canadian businesses to reassess their expenses. As clients look for savings, some are turning to their insurance policies &mdash; and that, says <a href="https://www.sovereigninsurance.ca/our-team/calgary/chris-charlton" title="" target="">Chris Charlton</a>, Assistant Vice-president of Commercial Solutions (Western Region), with Sovereign Insurance, is where things can start to unravel.<o:p></o:p>
&ldquo;In this environment, we&rsquo;re seeing more businesses trying to manage their absolute cost spend, not just their rates and exposures,&rdquo; he says. &ldquo;Insurance gets lumped in with utilities or supplier costs, but that&rsquo;s a mistake. Insurance is not a commodified item. It behaves very differently &mdash; especially when you need it.&rdquo;<o:p></o:p>
The shift has been real &mdash; and it&rsquo;s especially concerning when insurance is treated like a simple line item on a budget sheet, Charlton adds.<o:p></o:p>
<h4 class="MsoNormal">The most common cutbacks<o:p></o:p></h4>
The temptation to cut coverage can show up in subtle ways, says Charlton. &ldquo;We&rsquo;re seeing changes around building valuations, stock and work-in-progress, and indemnity periods for business interruption,&rdquo; he explains. &ldquo;Some clients are reducing limits or skipping contingent business interruption entirely.&rdquo;<o:p></o:p>
There&rsquo;s also a growing trend of questioning the value of specialty coverages. &ldquo;Is Cyber really essential? Do I need Directors and Officers or Employment Practices Liability? That&rsquo;s the conversation we&rsquo;re seeing more of &mdash; a shift in mindset around what&rsquo;s considered &lsquo;core&rsquo; and what&rsquo;s considered optional.&rdquo;<o:p></o:p>
The challenge, he says, is that these levers &mdash; reducing limits, scaling back coverage, or relying on outdated valuations &mdash; are easy to pull, but the long-term consequences can be significant.<o:p></o:p>
<h4 class="MsoNormal">The real cost of cutting corners<o:p></o:p></h4>
&ldquo;When a business needs to recover from a loss, the decision to underinsure can create a massive resource drain,&rdquo; Charlton says. &ldquo;That includes deductible gaps, waiting periods, and shortfalls from undervalued assets or inadequate indemnity periods.&rdquo;<o:p></o:p>
The ripple effects go even deeper. &ldquo;In a tight labour market, your employees are your most valuable asset. If your recovery plan is delayed or underfunded, it puts strain on your team &mdash; and that can be devastating to morale, operations, and retention,&rdquo; he adds.<o:p></o:p>
There&rsquo;s also reputational fallout. &ldquo;Underinsurance creates friction in claims. It damages trust. When expectations aren&rsquo;t met &mdash; even if those expectations were never clearly discussed &mdash; it reflects poorly on everyone involved.&rdquo;<o:p></o:p>
<h4 class="MsoNormal">From price to value: reframing the conversation<o:p></o:p></h4>
Charlton believes the conversation should be shifted away from cost and back toward value.<o:p></o:p>
&ldquo;The best tool brokers have is their time,&rdquo; he says. &ldquo;If your client interaction is limited to an email at renewal, you&rsquo;ve missed the chance to add value. But if you take the time to understand [your client&rsquo;s] evolving risks, you can guide a more nuanced discussion, one that focuses on what&rsquo;s actually being protected and why.&rdquo;<o:p></o:p>
He encourages brokers to look for red flags, like static valuations, outdated indemnity periods, and business interruption limits that haven&rsquo;t changed despite fluctuations in revenue. &ldquo;Ask yourself, &lsquo;Is this business accurately insured?&rsquo; Not under or over &mdash; but accurately.&rdquo;<o:p></o:p>
<h4 class="MsoNormal">Supporting smarter risk decisions<o:p></o:p></h4>
As a niche commercial insurer laser-focused on midsize to large industries &mdash; including manufacturing, construction and contracting, wholesale, warehousing and transportation, and energy and resources &mdash; Sovereign recognizes there isn&rsquo;t a one-size-fits-all solution.<o:p></o:p>
&ldquo;We continue to invest in our industry-specific expertise, risk engineering, and localized underwriting &mdash; not just to quote policies, but to help brokers and clients protect what matters most,&rdquo; Charlton says. &ldquo;Having underwriters who live and work in the same regions as our clients enables us to understand those market nuances &mdash; and they&rsquo;re empowered to make decisions that reflect it.&rdquo;<o:p></o:p>
Sovereign&rsquo;s team takes time to explain policy design and coverage trade-offs, he adds. &ldquo;We&rsquo;re not here to commodify. We&rsquo;re here to enable smart underwriting decisions, supported by technology, not dictated by it.&rdquo;<o:p></o:p>
In today&rsquo;s climate of complexity and uncertainty, underinsurance isn&rsquo;t just risky &mdash; it&rsquo;s avoidable, he adds.<o:p></o:p>
&ldquo;This process doesn&rsquo;t lend itself to shortcuts,&rdquo; Charlton says. &ldquo;It demands attention, time, and nuance. By collaborating with our broker partners, we can turn risk conversations into real-world resilience, and make it easier for Canadian businesses to navigate complexity and avoid costly missteps.&rdquo;&nbsp;

How can brokers help clients see the true cost of underinsurance?

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Managing Risk

Wildfires have become one of Canada&rsquo;s most severe and unpredictable natural catastrophes, posing escalating challenges for the insurance industry. Unlike &nbsp; floods or earthquakes, wildfires can spread rapidly, affect vast areas, and lead to prolonged business interruptions. While floods and earthquakes present different types of risk, wildfires are uniquely volatile. They can shift direction quickly, cover vast terrain, and lead to long-term business interruptions. While sectors such as tourism, forestry, mining, and agriculture are traditionally seen as vulnerable to wildfires, manufacturing, warehousing, and distribution operations are now facing similar risks. This 2025 wildfire season, insurers, brokers, and insureds must adopt a proactive, risk-aware mindset&mdash;identifying exposures, implementing mitigation strategies, and leveraging advanced technologies to stay ahead of emerging threats.
<h4>Why Wildfires Are Different from Other Natural Catastrophes</h4>
<ul>
<li>Rapid Spread &amp; Volatility: Wildfires can change direction without warning, complicating evacuation efforts and asset protection.</li>
<li>Long-Term Business Impact: Even if flames never reach a facility, smoke damage, road closures, and utility outages can halt operations for weeks.</li>
<li>Cascading Secondary Risks: Hazards like landslides, water contamination, and reduced insurability in fire-prone areas compound the challenges of recovery.</li>
</ul>
<h4>Wildfire Outlook for 2025</h4>
This year, Canada is on track to experience its second-worst wildfire season on record. Rising temperatures and dry conditions have already led to significant wildfire activity across British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario.&sup1; According to Public Safety Canada, wildfire risk across western Canada is expected to rise sharply in July and remain well above average through August - particularly in southern B.C. Eastern Canada may see near-normal conditions, though late-summer projections remain uncertain.
<h4>New Vulnerabilities in Manufacturing &amp; Warehousing</h4>
For manufacturing, warehousing, and distribution operations, wildfires represent not just a physical threat&mdash;but a severe operational disruptor. Key vulnerabilities include:
<ul>
<li>Concentrated Assets: Large volumes of stock and high-value equipment housed in centralized facilities increase potential losses.</li>
<li>Outdoor Inventories: Items like trailers, pallets, or vehicles stored outside are highly exposed to radiant heat and embers.</li>
<li>Operational Disruption: Wildfires can trigger widespread delays in production and logistics due to shutdowns, road closures, and equipment downtime.</li>
</ul>
Additional secondary risks include:
<ul>
<li>Smoke Infiltration:&nbsp;Smoke can damage sensitive manufacturing processes, spoil goods, and pose health risks to employees.</li>
<li>Utility Failures: Power outages may idle production lines, affecting fulfillment timelines and revenue.</li>
<li>Logistics Gridlock: Transportation and distribution operations may be halted by evacuation orders or impassable routes.</li>
</ul>
<h4>How Insurers and Brokers Can Help Clients Mitigate Wildfire Risk</h4>
Wildfire is a complex risk that demands collaboration. Brokers can play a unique role in educating clients, assessing exposures, and activating risk mitigation strategies with insurer support.
Build Business Resilience
A solid business continuity plan (BCP) is a cornerstone of operational resilience. Whether the business is large or small, a BCP ensures that critical functions can continue&mdash;even in the face of disruption.
Sovereign provides tools to help clients strengthen continuity strategies and protect their people, property, and operations.
<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-steps-for-developing-a-business-continuity-plan" title="" target="">5 Steps for Developing a Business Continuity Plan</a> <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/safeguarding-your-equipment-in-challenging-times">Safeguarding Your Equipment in Challenging Times</a>
<h4>Stay Ahead with Nat Cat Radar Alerts</h4>
In 2024, Sovereign launched Nat Cat Radar&mdash;a digital tool that integrates satellite imagery, government data, and policyholder information to help identify clients at risk from active wildfires.
Brokers who subscribe to Nat Cat Radar Alerts receive notifications when a client&rsquo;s property is within 100 km of an out-of-control wildfire. Alerts include timely mitigation resources to support emergency planning, site protection, and activation of BCPs.
Brokers have already used Nat Cat Radar to prompt proactive site evacuations and risk prevention steps during the 2024 season.
<h4>Risk Assessments Before and After the Fire</h4>
Even after a wildfire has passed, brokers should remain vigilant for ongoing risks like structural damage, supply chain delays, and utility disruptions.
<ul>
<li>Prioritize High-Risk Locations:&nbsp;Facilities near forests or on sloped terrain may benefit from site-specific engineering assessments.</li>
<li>Identify Coverage Gaps: Review business interruption, contingent BI, and extra expense coverages to ensure they reflect current needs.</li>
<li>Leverage Risk Engineering Support: Sovereign&rsquo;s Risk Engineers are available to conduct customized resilience assessments for high-exposure clients.</li>
</ul>
As the 2025 wildfire season intensifies, Canadian businesses face mounting uncertainty. But with thoughtful planning, the right tools, and strong partnerships, resilience is within reach. At Sovereign, we&rsquo;re committed to helping build a stronger Canada&mdash;by supporting the businesses and communities we serve.
Want to learn more about wildfire mitigation strategies or Nat Cat Radar? <a href="https://www.sovereigninsurance.ca/contact-us">Contact us!</a>

Source: &sup1; Public Safety Canada &ndash; <a href="https://www.canada.ca/en/public-safety-canada/news/2025/06/ministers-present-2025-wildfire-season-forecast.html" title="" target="">Ministers Present 2025 Wildfire Season Forecast</a>

Wildfires Do More Than Burn

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Wildfires do more than burn

In today&rsquo;s competitive commercial insurance landscape, success isn&rsquo;t only measured by how long a company&rsquo;s been around &mdash; it&rsquo;s measured in how it thinks, adapts, and innovates.<o:p></o:p>
After more than 70 years in the industry &mdash; and a few reinventions along the way &mdash;&nbsp; Sovereign Insurance&rsquo;s journey has proven one thing: staying relevant requires a challenger mindset.<o:p></o:p>
Rather than playing it safe, the insurer embraced bold thinking &ndash; modernizing its products, redefining how it collaborates with partners, and building a culture that values purpose and innovation.<o:p></o:p>
Focus fuels advantage<o:p></o:p>
It&rsquo;s a mindset that&rsquo;s equipped Sovereign to think big-picture &ndash; and recognize that standing out meant honing in, says Colette Taylor, Sovereign&rsquo;s COO.<o:p></o:p>
&ldquo;Rather than trying to be everything to everyone, we chose to be a top niche carrier,&rdquo; she says.<o:p></o:p>
The company made a deliberate shift to sharpen its focus on midsize to large commercial industries including manufacturing, construction and contracting, wholesale, warehousing and transportation, and energy and resources.<o:p></o:p>
Sharper focus enabled Sovereign to deepen its underwriting expertise and deliver greater value where it matters to their partners and clients the most. This gave the company the foundation it needed to innovate upon.<o:p></o:p>
Innovation reflects adaptability<o:p></o:p>
Because when you think like a challenger, innovation becomes habit &mdash; and complacency doesn&rsquo;t stand a chance.<o:p></o:p>
That&rsquo;s core to how Sovereign approached modernizing its products in 2023 and 2024, when it launched a new suite of base wording &mdash; comprehensive, bilingual, digitally accessible, and customizable. &ldquo;The goal wasn&rsquo;t just modernization; it was creating meaningful solutions that reflect the realities Canadian businesses face today,&rdquo; Taylor says.<o:p></o:p>
These product updates weren&rsquo;t a one-time effort either &mdash; they were part of a larger shift in how Sovereign views its role in a constantly evolving market: proactive, adaptive, and responsive to real-world needs.<o:p></o:p>
Collaboration drives growth<o:p></o:p>
Sovereign&rsquo;s challenger mindset also reshaped how it collaborates externally.<o:p></o:p>
It redefined relationships with broker partners &ndash; moving beyond traditional models to focus on deeper listening, faster responsiveness, and co-creating solutions that anticipate client needs.<o:p></o:p>
&ldquo;Our claims model, risk engineering services, and program development were directly shaped by what we heard from our partners,&rdquo; says Taylor.<o:p></o:p>
Programs like Sovereign&rsquo;s concierge claims and risk engineering for top partners aren&rsquo;t just service upgrades &mdash; they&rsquo;re evidence of a mindset that prioritizes agility, mutual trust, and meaningful partnership over rigid processes.<o:p></o:p>
Culture builds resilience<o:p></o:p>
Internally, Sovereign&rsquo;s Employee Value Proposition is another example of challenger thinking at work.<o:p></o:p>
Facing a highly competitive talent landscape and retiring Canadian workforce, Sovereign invested in creating a strong culture where innovation, collaboration, and purpose-driven work could thrive.<o:p></o:p>
&ldquo;Because market challengers recognize true resilience begins with its people,&rdquo; Taylor says. &ldquo;Our partners and clients benefit directly from our talented team. When you like what you do, who you work with, and feel part of building something special, it makes a big difference and it shows up in everything we do.&rdquo;<o:p></o:p>
Mindset matters most<o:p></o:p>
Reflecting on the company&rsquo;s rich Canadian history and evolution over the past seven decades, Taylor says the journey hasn&rsquo;t always been smooth.<o:p></o:p>
&ldquo;Competing against larger players for talent and market share hasn&rsquo;t been without its challenges,&rdquo; she says.&nbsp; &ldquo;Like the rest of the industry, we&rsquo;ve faced numerous challenges &ndash; from regulatory changes and economic fluctuations to the evolving expectations of clients and partners.&rdquo;<o:p></o:p>
But challengers know resilience isn&rsquo;t just about weathering change &ndash; it&rsquo;s about embracing it, she adds.<o:p></o:p>
&ldquo;Throughout it all, the one constant that has set us apart is our ability to question the status quo and seek out innovative ways to add value. Being future-ready means it&rsquo;s the intangibles &mdash; mindset, culture, relationships &mdash; that matter most.&rdquo;<o:p></o:p>
Looking ahead, Sovereign is poised for growth: focused on leveraging innovation and technology, creating new opportunities for partners and flexible solutions that meet evolving client needs &nbsp;&mdash; all grounded in the challenger mindset that brought it here.<o:p></o:p>
&ldquo;We&rsquo;re ambitious about doing things better &mdash; not just bigger,&rdquo; Taylor says. &ldquo;Mindset isn&rsquo;t something we talk about once a year. It&rsquo;s how we navigate change every day, and how we&rsquo;ll keep moving forward.&rdquo;<o:p></o:p>

How did a challenger mindset redefine Sovereign's Journey?

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Bob Lawlor

Senior Specialist, Atlantic Operations

Jeff Bower

Senior Underwriter, Commercial Auto, Atlantic Region

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Josh Armstrong

Senior Underwriter, Commercial Lines

Lance Chipudhla

Associate Vice President, Broker Distribution Strategy

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Intermediate Underwriter, Automobile, Atlantic Operations

Marcus Ouellette

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Mary Burke

Senior Underwriter, Automobile, Atlantic Operations

Oussama El Allaoui

Underwriting Specialist, Commercial Solutions

Pam Boutilier

Intermediate Underwriter, Automobile, Atlantic Operations

Tanya Haley

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Tommy MacKinnon

Underwriting Specialist, Commercial Auto, Atlantic Operations

Wes Gray

Associate Vice President, Commercial Solutions, Eastern Region