Clients must be number one priority

BROKERS AND CARRI ERS must respond to client needs as a matter of priority, believes Julian James, CEO, International Insurance, Sompo International

The most important people in the insurance chain are the buyers, and it is imperative that both brokers and insurers deliver on what is needed by the insureds.

So said Julian James, CEO International Insurance at Sompo International. “Insureds have faced huge challenges presented by the Covid-19 pandemic and even now are facing energy and transport challenges; and at the same time, they have been finding insurers reducing their risk appetite and capacity for important lines,” he added.

There is a risk, he said, that brokers and insurers alike have been too introspective, thinking about their own position at the expense of their clients. “We need to adjust our lens to look at these issues through our clients’ eyes,” he suggested, adding that doing that might create some opportunities for the market.

“We should be thinking about solutions to help with the risks facing insureds, rather than designing products to suit us. I think brokers are equally culpable as insurers on this.”

However, James stressed: “Overall, brokers are doing a good job of representing their clients when talking to insurers. But if clients are not seeing that, then we must make some changes. My take is that the market is not quite as developed as it should be about looking at the world through the clients’ eyes.”

There is still “an unbelievable obsession with pricing”, he said, “instead of discussing what we should be doing for clients”. He is by no means negative about the efforts put in by insurers and brokers in the last 18 months, saying that by and large, the sector coped very well with the pandemic and delivered on its promise to offer coverage and pay claims. “Let’s not wear the hairshirt too much,” he said, “there were a lot of things done very well during the pandemic.”

James believes that organisations that have put risk management at the core of their structures will have done a better job during the pandemic and had better outcomes, “but it is not just about analysis of risk but increasingly about the level of communication between insureds and insurers, and that is not always down to the size of the company or insurance programme”, he explained.

“Those with solid risk management will understand the risks and be able to engage in a more open dialogue with the market” and brokers have a key role to play in that dialogue, James added.

DIFFICULT LINES

However good the risk management and dialogue, though, there are some problem areas that James believes will remain difficult for the months ahead, including D&O, errors and omissions, as well as professional liability. “That does reflect the history of losses,” he said.

“A poor loss experience will impact the ability to find insurance in the months ahead.”

But risks are also undergoing change, thanks to the pandemic, and that will also have influenced insurers’ views of those risks. “Take the airline industry, for example,” said James. “It is a great example of the upheaval. Planes were no longer up in the air but parked up waiting for a change in the market. The risks have changed as a result and insurers have reflected that in their programmes.” Communication between brokers and clients, and then with insurers, has been essential for everyone to understand the new risks and adapt.

“What characterises the insurance industry is continual change and challenge,” said James. And that is something brokers and their clients will need to bear in mind for the future too, he said, adding: “There is no substitute for proper communication.” He remains confident that the broker model will remain relevant well into the future as clients look to their brokers, not just for insurance renewals and changes, but also for advice and support around their risks.

“As the world of risk continually evolves, clients need proper advice,” he stressed. “They need to find the right insurance capacity for their risks and brokers are generally doing a very good job of finding that for them. The role of the broker is as strong as ever.”

CONTINUAL IMPROVEMENTS

Being able to stay ahead in terms of managing risks and being prepared for future risks is likely to involve greater use of technology in the future, predicted James, and brokers are likely to need to invest.

But, he said, this is all part of a broader picture of continual

improvement that any business needs to do to thrive. “Brokers need to stay front and centre of the risk conversation. We have already evolved massively from the days of brokers standing in front of the underwriter waiting for their opportunity to present a risk on paper.

“Now, basic stuff is handled so quickly, courtesy of technology – £500m of capacity can be found in an afternoon. And that is a good thing for the market and clients alike.”

James also believes that clients will continue to want choices about who they deal with. While consolidation has been a feature of the broker sector of late, he said there is still sufficient choice for clients both in terms of brokers and carriers and again market evolution will always be part of the landscape. “It is healthy for us and for the client,” he added.

Overall, he said the market is in a good shape for the future and there are signs of confidence emerging. “We have actually increased our risk appetite in a very uncertain world. You can’t look through rose-tinted glasses but I think the insurance sector – carriers and brokers – have responded well in the crisis and done what was expected of us.”