"What we are broking is critical"

Rising prices in the energy market are highlighting the important role played by brokers, an expert has said.

Ryan Mansom, national practice leader – energy, at Gallagher, said that working alongside clients in a tougher market is a “year-round process” rather than a focus simply on renewals.

“It makes the role of the broker more important, understanding the risk. What we are broking is critical and understanding the product we are broking into is critical, as is managing clients’ expectations,” Mansom told Insurance Business. “This is where the years of structuring programs and building relationships comes to the forefront.”

Mansom said that as the energy market becomes more challenging, the tripartite relationship between broker, client and underwriter takes on added emphasis as it helps build trust between parties, particularly for those that have experienced a loss.

Price increases in the market range from flat to plus 10%, Mansom said, with pricing reductions close to non-existent.

“It has been interesting over the last four months because as we headed towards the end of 2017, the market became very reactive and was trying to look forward as to what reinsurance costs would be and then charging rises,” he explained.

“Since then, from an upstream point of view, we have seen that reinsurance costs have remained pretty much flat and there is more of a thought-position taken by insurers… there are no reductions any more. There is a lot less flexibility in the pricing.”

Mansom noted that natural disasters across the globe are to blame for rising prices as the previous year saw 320 energy claims costing US$9.2 billion with hurricanes in the United States to blame for more than US$1 billion of those costs.