Throughout the world, the triangle is renowned for its structural integrity, unmoving when pressure is applied and able to absorb energy while maintaining its shape. The relationship at the core of the insurance proposition is tripartite in nature, with insurers, distribution partners and insureds each playing a fundamental role in the creation of thriving, sustainable economies.
Conversations with insurance companies across the market reveal the emphasis that continues to be placed on maintaining that tripartite relationship, which is reflected in turn by brokers and MGAs. However, today’s complex risk environment – and its impact on market conditions and, in turn, the pricing cycle – is necessitating a rethink of what this relationship really entails.
With that comes the need for a re-examination of the role risk management and mitigation play in creating a healthy insurance market for all stakeholders. If the insurance industry is going to support corporate clients facing a myriad of heavily interconnected economic, geopolitical, environmental and technological risks, it’s going to have to find a way to help clients understand these risks more fully, and to help mitigate them by embedding improved risk management cultures and practices within their business.
Offering insight into the risk environment facing clients, Andy Jones (pictured), director of risk consulting at RSA, noted the complex dynamics of today’s marketplace. When faced with such complexity, he said, there’s a real danger that everyone gets “lost in the conversation around premium” at a time when the focus needs to be on risk management.
With a background in serving the risk consultancy function of a FTSE 100 company, Jones came to the insurance world in a different way to many of his peers and it has given him a unique perspective on the challenges facing these companies – and on how to have the right conversation about risk management. “My role saw me engaging with the insurance market, engaging with my broker partners, and from that, comes my testament that when [risk management] works, it works to the benefit of all, regardless of what the market is doing.
“In that sense, it doesn’t really matter what the premium is or what the market cycle is doing. Our ethos is to support and help our clients prosper and that means keeping them doing what they do every day, on a 365 basis. It doesn’t matter if we’ve got the best reputation going in, how we deal with clients or how we manage and pay their claims, if we aren’t putting our focus on how to stop something happening that will stop them from doing what they do best.”
If a client isn’t having losses, it means there’s no interruption to their business activity and they’re maximising their profitability. Conversely, that means the insurance company is maximising its profitability from a loss ratio perspective, regardless of what’s happening in the wider insurance cycle. Inevitably, this creates a healthy market for the broker who sits in the middle, creating the rare example of a ‘win-win-win’ in insurance.
By unlocking proactive risk management, the conversation can move away from premium, Jones said, by proving that profitability is possible at any point in the market cycle. At its core, he believes that an insurance company is – or should be – foremost a risk management company and that this focus on risk management is only proof point of the pledge of insurers to be a “trusted partner”. “The term ‘trusted partner’ gets bandied around a lot. And I do passionately believe in it, but I also believe you have to build and work at becoming that partner all the time, it’s not something that appears overnight.”
In order to be a trusted partner to clients and brokers, insurers need to foster strong relationships which are founded on great service, communication, reliability, transparency and trustworthiness. It’s not a once-and-done activity but rather an ongoing process, continually shaped by ongoing and open conversation. That brings the need to really underscore the tripartite nature of the relationship underpinning insurance, and the humans at the heart of that.
“We’ve got to get back to quality conversations between clients, insurers and brokers,” according to Jones. “All these fancy software programmes and discussions around AI and the role of apps are great, and they’re interesting. But at its core, if we lose sight of how to consult and collaborate, we will be the poorer for it. We need to maintain human contact and human relationships if we’re going to be able to have very honest conversations, which might at times be challenging. If it’s coming from the right place and with the client’s best interests at heart, it cannot be the wrong conversation.”
From his own time on the other side of the risk consulting fence, Jones saw first-hand the importance of insurance partners being genuine and transparent. It made having tough conversations a lot more palatable, he said, because it meant you understood implicitly where your own responsibilities lay and the need to lay the right groundwork in terms of internal risk practices. “I’ve been on the other side of hearing those tough conversations,” he said. “And I know that those conversations have to be followed with a pragmatic solution. The real winners here will be the ones who can have those quality conversations as early as possible and follow them up with pragmatic solutions.”
