Depending on where brokers sit in the insurance ecosystem, the challenges facing their clients and their own business models differ accordingly.
For instance, a recent study from Prestige Underwriting spotlighted major concerns among brokers about the lack of capacity in the non-standard insurance market – citing that 79% of brokers across the market find it difficult to secure coverage for clients with specific non-standard risks. Meanwhile, Aviva’s latest ‘Broker Barometer’ study highlighted insurer service as the number one challenge impacting brokers today, followed closely by underinsurance concerns driven by inflationary pressures.
Offering his perspective on the risk environment facing brokers today and how well-equipped they are to mitigate these pressures, John Dunn (pictured left), MD of Brokerbility emphasised how service remains a key concern. “This has been evidenced in the most recent renewal cycles with lots of feedback from brokers about many more risks going on extension due to insurers struggling to get terms to brokers in a timely manner to present them to clients and for the clients to be able to make a decision in time for the original renewal date.”
Identifying some of the key factors behind this, Dunn said that feedback suggests that while insurers have recruited and filled many outstanding vacancies, skill gaps remain in front line trading to deliver service at historic levels. He added that members of networks can help avoid some of this turbulence as network relationships bring dedicated contact points and routes of escalation.
Houssam Yehya (pictured right), director and group head of international at GBN Risk Solutions, noted that the key risk that concerns his team relates to the complexity of broking business internationally.
“Whether it’s a multinational broker needing a solution in a particular country, or a small broker with risks in multiple territories, many are unable to follow the growth of their clients as their needs grow internationally,” he said. “There are many factors behind this risk, including the broker not having the knowledge or resources to place international business and the potential for an E&O claim if it is not done correctly or compliantly.
“International business is complex, so understanding the jurisdiction, law and compliance frameworks in overseas territories is a necessity. The challenge is being able to deliver the same level of service abroad as at home.”
Examining how brokers can and have been mitigating these challenges, Yehya underscored how being able to provide an international solution requires local knowledge on compulsory and recommended insurance covers, which differ in every country. Alongside this, he said, expertise is needed in navigating the local regulatory and legislative environment, including how business is required to be placed, e.g., some countries operate on a ‘cash before cover’ basis.
“Perhaps the most important requirement is having a trusted local partner on the ground,” he said, “a partner that knows and understands international and can provide in-person servicing to the overseas client, including premium collection and conducting risk assessments, etc. International expertise is a niche in itself and most brokers do not have the resources to be able to put the support structure in place.
“It is a big investment to obtain these skills in-house. The majority of small and specialist brokers need external help with international to enable them to focus on growing their client’s business without having to manage the technicalities of international placements.”
Despite the complexities involved with international business, Yehya said his advice to brokers is not to shy away from the opportunity it presents but to make sure they are working with the right partners. “Establishing an international capability from scratch is costly and time consuming,” he said, “and we don’t recommend going down that route when existing solutions [are] readily available.”
With brokers facing a complicated and fast-changing risk environment, the future can look uncertain. However, both Yehya and Dunn affirmed their confidence in the future of the sector, though Dunn added that the market does need to find new ways to support the new generation of broking entrepreneurs. This includes helping them to navigate the high cost barriers to entry and supporting them in navigating the regulatory landscape.
“Our market needs diversity to be able to provide the best deal for the client and we are confident that there remains a place for everyone,” Yehya added. “And being able to manage international will provide brokers with a competitive edge and allow them to retain customers and keep hold of overseas revenue.”
