Marsh UK chief executive, Martin South has called for the insurance industry to build stronger bridges between intermediaries and underwriters, in order to capitalise on emerging risks.
Speaking at Lloyd’s, South said that until the industry addressed its lack of efficiency, it could not prosper.
He said: “We have reached a tipping point. The effect-iveness and efficiency of our industry is shocking. Numer-ous attempts to rebuild the value chain have not gone as we would have liked.”
Transactional costs with clients were “horrendous” and execution was “shambolic” compared to other markets, said South, a former chief executive of Zurich London.
He said: “Our clients won’t believe we can innovate until we get the basics right. We cannot innovate in isolation.”
He called for insurers to do more to develop relationships with brokers. “Underwriters refer to brokers as their distributors. We are not. We act for our clients, ” he said.
“Good underwriting is the centre of good customer-centred behaviour. The problem is the underwriting community thinks it is easy for major brokers to turn on the tap to produce business.”
He also called for the devel-opment of niche products based on exclusive relation-ships between insurers and brokers.
He said: “We need to fund-amentally reassess products. I don’t see why underwriters have to make products available to everyone.”
Pointing to a lack of understanding that persists in areas such as business interruption, terrorism and environmental liability, he added: “We must sit down and deal with today’s issues – and not with a product that was developed in the industrial age.”
And in order to gain a competitive edge, South urged insurers to focus on building relationships instead of their brands.
Despite the difficulties of the market, South said he was optimistic about the future for brokers.
He concluded: “The power is coming back to the adviser.”