An industry leader has issued an assurance that the soft market will turn with ‘very steep’ increases on the horizon.
John Donnelly, Asia Pacific head of placement for
Marsh, said that while the market continues to be a challenge, a change will come.
“The continuing soft market is challenging brokers and carriers,” Donnelly told
Insurance Business.
“Broker’s margins have been under stress in recent years with strong competition among the major brokers on fees, and commission earnings down due to the lower premiums.”
In Donnelly’s view, history will repeat itself and the market will turn, prices will go up and in some sectors the increases “will be very steep and capacity will become scarce.”
“It is not imminent but when it does happen it will be a great opportunity for the broking community to find value for clients. In my experience we are much more valued by our clients when their premiums are going up and finding capacity in the global market is a real challenge.”
Donnelly called technology the greatest challenge facing the insurance industry as uncertainty remains around how the industry will be impacted.
With insurtech top of many minds in the industry, Donnelly was quick to note that tech giants such as Amazon and Google could still be keen to enter the insurance space and the impact on the customer market for brokers and underwriters could be “profound”.
While there may be some green shoots on the horizon for the market, the amount of capital remaining in the industry remains a worry for many.
Donnelly noted that the industry still provides superior return on capital compared with other investment opportunities.
“The industry has endured for more than three centuries and it will continue to flourish long into the future,” Donnelly continued.
“The major brokers have a great track record of getting capital to commit to the areas of the market that are inadequately serviced. I suspect in the future that the response of capital providers will be more reactionary and, through technology advances, brokers will get the capital to the opportunities more quickly.”
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