The hardening market, advances in technology and an increase in terrorism and cyber breaches are the three biggest challenges facing brokers and the wider industry in 2018, a broker boss has said.
Nick Harris, CEO for
JLT in Australia and New Zealand, believes that emerging risks are proving difficult to quantify.
“New risks are emerging that the market is finding hard to measure. This will mean better risk understanding is key from brokers on new emerging and existing industries,” Harris told
Insurance Business.
With prices continuing to harden, Harris said that it is in these markets where “you earn your stripes” as brokers will have to demonstrate value in the face of increasing client pressure.
“With the realisation that some parts of the market will be more difficult to operate in, it is critical that brokers have superior insights, relevant information to differentiate risks and are able to explain the risks clearly to underwriters,” Harris continued. “From JLT’s perspective these uncertainties present a further opportunity for us all to demonstrate what it is that sets us apart from our competitors.”
Advancing technology will also present a challenge to the industry, Harris said, as “lower end segmentation disruption” from technology commoditisation could impact broker margins.
“Clients requiring quality advice will need to allow for that investment. However, brokers will also need to continue to demonstrate value in managing markets,” he said.
As businesses begin to fully understand their cyber risk, alongside regulation changes in both Australia and the European Union, Harris said he expects to see more interest in cyber coverage which brings challenges not only for brokers, but also insurers.
“As more insurers enter the market, their challenge will be to develop innovative products that can add value to a client, while differentiating themselves from other competitors,” Harris said.
“Insurers will also need to determine their preferred appetite - will they only focus on more sophisticated mid-market to large corporate risks, or will they focus on the SME market? Potential losses may be smaller but the frequency of losses may be greater due to clients having inadequate security controls.”
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