Our sister magazine StrategicRISK surveyed risk managers on the service delivered by their insurers and brokers. FM Global outranked the rest of the field on the insurer side, while Heath Lambert retained the top broker spot. But the results show that its rivals are gaining ground fast

The 2010 survey results are in and the target respondents have delivered their verdict on the service they receive from their brokers and insurers.

Last year’s broker leader, Heath Lambert, retained the overall top slot, joined by FM Global for the insurers. But many other players improved their rankings on individual service dimensions, resulting in significant movement in the overall rankings. For the insurers, this meant some new entrants to what has now become the insurer Top 15. See attached pdf for tables of results.

The survey asked respondents to rate the service they receive from their brokers and insurers, and to provide as much comment, both supportive and critical, as they felt able.

Brokers were rated on four service dimensions: responsiveness; ability to understand changing business needs; practical leverage with insurers; and level of risk expertise. The insurers were rated on five dimensions: ease of access to decision-makers; timely and accurate documentation; value for money given quality of cover; speed of claims settlement; and fairness of claims settlement. The overall rankings were computed by totalling the scores for each service dimension.

Eighty UK risk managers from both the private and public sectors responded to the survey and, although slightly less in number than last year, provided a significantly higher number of individual ratings for a wider range of insurance companies and a similar number of ratings for the brokers.

Additional survey questions probed issues such as the transparency of brokers’ remuneration by insurers, how brokers had managed their customers’ changing risk profiles in these economically challenging times, and which aspects of claims management service are most valued by risk managers.

With the survey in its second year, comparison of 2009 scores with those of 2010 became possible. Last year’s scores were subtracted from this year’s, with the differences indicating how respondents perceived the relative levels of improvement made by brokers and insurers across the various service dimensions.

On this measure, the results showed that HSBC Insurance Brokers, since acquired by Marsh, made the greatest overall improvements by far to its services, while Swiss Re led the insurers’ group, closely followed by FM Global. Conversely, XL Insurance lost the most ground among insurers, and Willis among the brokers, with Heath Lambert taking a surprising second-to-last slot by this comparison.

Leaders’ performance

Between the insurers, FM Global’s ratings for all service dimensions measured, except claims, completely outranked the rest of the field. The rating sample for the company was small, however, indicating that it has only a minor market presence among this group of respondents.

Nevertheless, those who used FM Global’s services gave excellent ratings and very positive feedback. “Proactive, excellent resources and works closely with the insured” was a typical comment. The only cloud on FM Global’s horizon was that it did not lead in either of the claims service categories; Chubb was the clear leader in both, leaving FM Global placed second for speed of settlement and sixth for fairness of settlement.

Heath Lambert retained its grip on the top broker slot by performing especially well on ‘level of risk expertise’. “Heath Lambert has provided a tailored approach to our needs” and “much more professional” are typical of the comments made about the broker.

Heath Lambert cannot afford to rest on its laurels, however. Comparisons with 2009 service scores showed other brokers were perceived to have made more progress in terms of improving their service. Heath Lambert lost ground in all categories except level of risk expertise.

Other findings

One of the more significant survey findings showed that 45% of respondents used only one broker, indicating that many risk managers are not in a position to directly compare and contrast service levels between brokers.

Aon appears to benefit most from this level of inertia; the company was placed in one of the bottom three places across all service dimensions and received the highest number of negative comments, yet still seems able to retain the strongest market presence based on the number of ratings. The company is no doubt helped by some strong advocates, who highly praised specific parts of Aon’s business, such as its enterprise risk management (ERM) offerings.

Transparency of broker remuneration by insurers remains an issue for some risk managers. Broker remuneration was less than fully transparent for around 44% of respondents.

No broker is able to claim that its remuneration by insurers is fully transparent to its entire customer base. “Be clearer on transparency of contingent revenues and help identify real costs of service provision” was a comment made by one risk manager.

When it comes to claims management service, most risk managers saw help with the actual loss as the most important service that the insurer could deliver, while pre-loss services were deemed to be of secondary importance. Although ranked in third place, it is nevertheless interesting to note that one-third of respondents saw value in post-claims services, ranking it of primary or secondary importance.

Seventy-five per cent of risk managers say they have had discussions with their broker(s) about how their risk profiles have changed as a result of the prevailing economic conditions. Many of the comments indicated that any changes were seen and accounted for as a normal part of business.

A minority of respondents saw the situation in more dramatic terms, however, perhaps best summed up by one risk manager who stated: “I think this is the biggest challenge facing the tripartite [client, broker, insurer}, but it is being driven by me, not the broker and nor, just as worrying, the insurer.”

This issue was seen in a different light by public sector respondents. As one risk manager commented: “As a public sector body, changes to our risk profile for insurance purposes have not been significant.” IT

Respondents to the survey will shortly be receiving their full copy of the survey results. Other readers interested in the survey should contact the group sales director, Tom Sinclair (tom.sinclair@nqsm.com)