Having started his insurance career way back in 1974, Stellar Insurance Brokers managing director Mike Pappalardo (pictured) has pretty much seen it all – from plenty of soft markets to a couple of hard ones, including the current market which he believes is perhaps among the hardest.
Here, the insurance veteran shares how the present circumstances, in his view, are impacting the industry, as well as what he is excited about moving forward.
“[The market is] probably not going to harden any further,” Pappalardo told Insurance Business. “I think it’s stabilised to some extent. The insurers are starting to post reasonable results, which means there will be some pressure on them to curtail any future increases. We’re just starting to see insurers not being so aggressive with price increasing, so I’m hopeful that’s the case.
“In terms of being a broker at the moment, it’s not that enjoyable because often you’re having to give clients news that they would not consider to be good. It tests relationships with your clients; that’s for sure. Having said that, some wonderful opportunities come out of that environment – because if you do have the relationships with your clients, then it’s very difficult for someone else to come in and get a better price or do something better than what you’re offering.”
Meanwhile, the COVID-19 pandemic obviously also continues to affect the world of insurance in more ways than one. On the client side, Pappalardo was happy to note that things didn’t turn out as badly as originally feared.
The MD, whose business is based in Brisbane, said: “This time last year, or maybe a few months earlier, it was a lot of doom and gloom. But there have been many clients of ours that have just gone gangbusters during this period. The end result was much better than what we had anticipated.
“Also, we’re still very fortunate because we don’t have the lockdowns that the southern states have. I can still go and see clients if I need to – masked up, but you can still communicate face to face with clients in Queensland.”
In fact, on the day Insurance Business spoke with Pappalardo, he had two client appointments in the morning. The client base of Stellar Insurance Brokers is predominantly from southeast Queensland, so the firm isn’t as impacted in the same way that brokerages with interstate clients are.
“What it has done, I think, is make us a lot more efficient,” declared the industry stalwart, who spent 28 years on the underwriting side of insurance before making the switch to broking in 2003. “Things that you would have thought needed to be done face to face, you actually work out that you don’t really need to do face to face.
“And some clients have really adopted that. They sort of got to the point where they understand that they can actually do it without the face-to-face contact. You got to be careful, though. Because for us, the face-to-face thing or the touch is very important. Otherwise, we got the risk of artificial intelligence taking over. So, we’re very keen not to have clients rely just on technology.”
Outlook-wise, Pappalardo is particularly positive, especially for brokers who provide specialised service and bring value to the table.
“I honestly believe that insurance broking is very, very valuable to people who want to assume risk, and anyone who’s an entrepreneur has to assume some risk,” he asserted. “So, I think the future of insurance is very, very bright, but not if you’re doing vanilla risks. If you’re adding value, there’s always going to be people who want specialised advice.
“If you’re adding value to your customer and they appreciate the fact that you understand their business, understand their risk, find solutions to their problems, that’s what we’re trying to offer. You can’t be a post office box and take the insurance premium from there and put it on one of your invoices and send it out – those days of broking are long gone.”
Referring to young brokers, Pappalardo added: “I think the future for them is very exciting. The next generation, if you’re committed to this industry, then this industry can be very good to [you]. So, I’m definitely encouraging my people and anyone I talk to, to consider insurance as their chosen career rather than something that just happened to them.”
