Businesses are also turning to their insurance brokers for risk management support, adds expert panel

BrokerFest 2023: Brokers must get closer to their commercial clients if they are to effectively help them navigate some of the toughest operating conditions in living memory.

Speaking at Insurance Times’ BrokerFest 2023 conference on 23 February 2023, Mark Cliff - chairman of Avid Insurance – told delegates there was a real need for brokers to better communicate with commercial clients as they struggled to understand the changing risks they face in today’s macroeconomic climate.

This includes, for example, high inflation, rising energy and staff costs, as well as supply chain difficulties.

“I have never seen [this] number of challenges [for] businesses for many years,” he said. “There are likely few here who would remember the last hard market and if we are to support our clients, brokers and insurers will need to come together.”

Cliff added that attritional losses, a tough reinsurance renewal and an average 20% increase in indexing had put insurance prices up at a time when commercial clients were under intense pressure from a range of directions.

As such, he believes brokers need to deliver in three key areas.

“The first is to put the customer at the heart of what we do,” explained Cliff. “Do we really understand their needs and are we able to meet them?

“The second is communication. The asset management sector is very good at positive communications and understanding the business. Is the same happening in the general insurance space? I do not see it on the whole.

“The third is around confidence. We need to give our clients confidence in the fact that we are protecting them as they seek to grow or survive.”

Understanding risk management

Nick Smallcorn - director for London at Clear Insurance Management - added that as an industry, the insurance sector is facing its own problems thanks to the UK’s economic environment, but he was concerned that brokers were beginning to focus inwards rather than seek to understand the pressures their clients faced.

“The skill brokers require will be to really understand the client’s plight,” he explained. “Some businesses are flying, but the majority are facing uncertainty and difficulty. They want certainty in their insurance - both in terms of cover and price.

“The brokers [that] prosper will be those [that] can get close to their clients.

“We need to listen to what our clients say and see what they want to show us. A headline turnover tells you one thing, but not how a business is really performing.

“Brokers need to ask probing questions to really get under the skin of [clients’] performance. We also need to look at the risks they really face, not the risks which were covered in the last policy.”

Smallcorn said that commercial clients were also increasingly looking to brokers to help them manage the risks within their business, which furthered the need for intermediaries to clearly understand their customers.

Cliff added that now is the time for brokers to invest in training their staff to understand the dynamics which come with a hard market.

He continued: “We have to ask ourselves how we train our people to understand the needs and risks [surrounding a hard market].

“In some ways, we have been far too focused on price rather than cover and the policy.

“Are we doing enough on risk management? Cyber gets dumbed down, with the client saying ‘it will never happen to us’ - that is until they get a ransomware attack. It is clear that [this] risk will only continue to grow.”

Fixing problems

For Cliff, brokers have to get their own houses in order to ensure they are maintaining services levels at a time when there is still concern over the service ultimately provided by insurers.

Smallcorn noted that this includes conversations between insurers and brokers over how best to meet the needs of the end client.

“We need to put more in [to] the insurers to say what can we do to solve the issues we face for our customer,” he explained. “Clients still need their problems fixed – brokers are pushing back [to insurers].”

Cliff and Smallcorn featured in a plenary session entitled How to help commercial clients deal with the impact of recession and high inflation, chaired by Insurance Times editor Katie Scott.

To read more coverage of BrokerFest 2023, click here.