Who better to delve into the array of challenges and opportunities currently facing insurance brokers than someone who not only works closely with these professionals but counts many of them among his friends? Given his role as director of broker markets at Allianz UK, Nick Hobbs (pictured) noted that developing relationships with and an understanding of brokers has been instrumental in enabling insurance partners to get the best out of each other.
“I think that the way to evolve such a relationship properly, is by starting very professionally, where everything is rigorous and structured and disciplined,” he said. “And if you do that, to the extent that mutual respect is earned through that rigour, discipline and earnest approach, then that kind of intimacy and proximity tends to come quite naturally. And over the years, it’s tough to do that, because not everyone is mentally geared up for it but, increasingly and certainly in 2020 and 2021, that’s the insurance world, and the broking world.”
This is instrumental to Allianz’s updated broker proposition, ‘strong partners for what’s ahead’, he said, which centres around keeping clear and open channels of communication, something that proved particularly vital during COVID.
Given its sheer size and scale, Allianz’s speed in moving online was remarkable, Hobbs said, with thousands of employees across the UK up and running remotely in the space of about two days. The expectation, however, was that a lot of clients would inevitably be left unattended by brokers due to the crisis, so he was hugely impressed when practically every broker partner managed to respond similarly.
“Maybe it’s because they are more fleet of foot and not tied down by big corporate drawstrings,” he said, “but I was stunned and gratified, and relieved as well because otherwise, we would have had to deal directly with customers, which isn’t the way we’re set up – which is why we distribute. Those first weeks were an interesting time, as we got to see the entire industry click into place in a way that we could never have guessed. And that’s been the case for the last 15 months, in that things have largely worked well for our customers.”
As it stands, Hobbs said, while some brokers have been hit very hard by the crisis and aren’t in great shape, these tend to be the exception. However, he added the caveat that this could potentially change over the next few months, as the business supports put in place by the Chancellor begin to unravel. At that point, he noted, some of the pent up issues facing businesses, which have been bandaged by that support, will start to emerge. This will have implications for brokers regarding how they deal with impacted clients and it could potentially also impact their cash flow.
Brokers need to be prepared to provide strong client support, Hobbs said, highlighting that through COVID many brokers have come into their own in terms of providing enhanced support services. Back in the day, a lot of brokers might have spent limited time with clients during visitation but now they’re putting some real time into their virtual meetings. And part of this is because clients are now increasingly recognising the need to have the right cover in place, as well as the role that brokers play in arranging policies that actually deliver on the promises that they make.
“And for those businesses who haven’t had that, it’s usually because the broker didn’t make the right choice so now [insurance cover] is on the agenda for boards and for business proprietors, so they expect a lot of things from brokers,” he said. “Now, as you come out of lockdown, some of the things that businesses and proprietors are worried about are going to suddenly come to the fore, such as their ability to make payments without government support in place anymore. Or the fact that new risks are emerging because we’re going to be in a very different economy post-lockdown than we were in either during or prior to lockdown.”
There are other concerns that Hobbs and his team can see buffeting the marketplace, including the latent but pressing issue of underinsurance. This has the potential to unsettle a lot of clients, he said, because they’ve just had to guess what their turnover was through a period of quiet economic activity. Once lockdown is over, many businesses are likely to find their declarations are nowhere near where they should be. And then, should they suffer a loss, their insurance payout may be less than their business needs to be in order to survive.
Overall, however, what COVID has truly highlighted, Hobbs noted, is just how resilient insurance businesses can be and, with that adaptability in mind, he is thoroughly optimistic about what the future has to bring.
