Most brokers working in Australia’s insurance market are generalists rather than specialists. They risk advise and sell different covers to a range of business types and professions. However, rising customer demands are now one of the biggest industry challenges and this is likely adding considerable pressure to generalist brokers who need to be subject matter experts across a wide range of portfolios.
“I think the Australian market is particularly challenging,” said Sam Weaver (pictured right). Weaver is general manger for Coalition, a specialist underwriting agency. The US-headquartered firm offers cyber coverages and risk assessments through brokers.
“I moved here last year from the US where brokers have really generally moved to a specialty model,” said Sydney-based Weaver. “There, brokers are solely focused on professional lines, or directors and officers (D&O) liability, or property, or cyber.”
In Australia, he said, the majority of brokers are generalists and “it’s a real challenge”.
“The average broker has to contend, not only with rapidly developing changes to every single field and industry in which they operate, but also rapidly developing changes to every product that's on offer and also rapidly developing nat cat markets,” said Weaver.
Insurance Business spoke to the cyber underwriter at the recent National Insurance Brokers Association (NIBA) Convention in Adelaide. Weaver was having coffee with Lewis Patton (pictured left) who gave another interesting perspective on the issue of demanding customers.
Patton, managing director of newly formed Artisan Underwriting, said today’s brokers are more demanding too.
“People generally are probably getting lazier - and that includes brokers and consumers,” he said. “They want everything with little effort and insurers have a challenge to find a way to fulfill that hunger but not at the cost of margins.”
However, Patton said with capacity currently “readily available” from Lloyd’s of London and some insurance lines softening, these customer challenges are contributing to “quite an interesting market.”
“The hardest thing for us is to be able to provide risk selection, measured underwriting, but still make it easy for the broker because they are unforgiving, because their clients are,” he said. “You get one chance without jeopardizing underwriting results.”
The increasingly complex and interconnected global risks, including cyber, nat cats and artificial intelligence (AI), can make it tough for a generalist broker in the corporate market.
The risk advice needs and insurance demands of this market explain why bigger insurance firms able to call on deep specialty knowledge, can dominate.
However, rather than the upper end of the corporate market, stakeholders say the SME business environment is well suited to a generalist broker selling small business coverages and personal lines offerings.
Beyond Australia, the insurance broking profession is facing the same challenges.
A broker survey by an insurer in Canada found that more than 80% of brokers think more specialisation is necessary. The report said brokers are developing specialisations to stay competitive.
The survey found that the advantages of specialisation include:
The broker’s deeper knowledge, according to the report, fosters more of a partnership relationship with customers.
Specialist brokers, said the report, are better at understanding the unique needs of a business and more likely to notice coverage gaps.
Specialist brokers, said the report, also tend to have more of a collaborative relationship with insurers than generalist brokers.
The report suggested specialisation “can give brokers an edge” because sometimes there’s less competition. These brokers also find new opportunities, it said, through referrals, cross-selling, and upselling.
A recent survey by insurance technology company JAVLN asked 500 Australian brokers from small and medium sized firms for their top industry challenge in 2024.
Intensifying demands from customers came in as the second top challenge after unaffordable insurance coverages.
The survey, Brokering Change, found that about one quarter of brokers thought their customers would rate their service very highly. However, the same percentage admitted to finding the last 12 months tough on their customer relationships.
Are you an insurance broker? How are you finding customer demands these days? Do you think greater specialisation would help? Please tell us below.
