Almost a fifth of risk managers and brokers say relationships under strain
Just under a fifth of brokers and risks managers feel their relationships have deteriorated or are unsatisfactory in the hard market, according to separate surveys by Commercial Risk Europe and Airmic.
A new survey of Airmic’s members finds that 16% are unsatisfied with their brokers, up from 2% in the first quarter. Some 63% are somewhat satisfied and 21% very satisfied.
Meanwhile, 18% of brokers polled by CRE feel their relationships with clients became strained in the past year as insurance rates rose and capacity became more difficult to find.
Some 53% of brokers surveyed for our Future of Risk Distribution 2021 survey, sponsored by Sompo International, feel their relationship with insureds has remained constant during this difficult period, with a further 29% reporting that the relationship has actually improved.
The Airmic survey finds members are more satisfied with brokers than insurers, however, with only 5% very satisfied with carriers.
The Risk Distribution survey also reveals that 54% of brokers surveyed are optimistic about broking distribution channels in the future. Only 11% are pessimistic, while 35% don’t believe anything will change.
Brendan Plessis, EVP, strategic distribution and development at Sompo International, is unsurprised by the findings, particularly when it comes to the longer-term future of brokers.
“I am not surprised that brokers feel more optimistic about the future of distribution,” he said. “We have been experiencing tough market conditions – in terms of pricing, appetite and business challenges – for several years. At times like this, brokers really come into their own and do what they are best at: finding the right cover at the right price for their clients.”
But Plessis did have a warning for the insurance industry. “To deliver quality service to the insureds, brokers need insurers that are willing to step up and provide capacity and creative solutions in tough times, especially in the harder-to-place risk classes like property and professional indemnity. This has been core to the relationships we have been building.”
And the insurer believes a change in perspective is needed from buyers too. “Viewing insurance as a one-off capacity purchase is probably not very helpful, and remembering those insurers who are there through bad times as well as when pricing softens is vital,” he said.
Looking at the changing nature of relationships between brokers and clients, Plessis believes the pandemic has given people a good reason to improve communication skills.
“When cover is harder to find, this drives everyone to look again at how they work together. Lockdown has given us all tools and processes that have helped collaboration, but we also know that much of what makes the insurance market great is the interaction between the people who work in it – bringing creativity and solutions. Even if that is only by virtual meetings, talking more can only be a good thing,” he said.
Despite small signs that some of the hard market pressure is easing, Plessis thinks the next renewals will continue to be tough.
However, he stressed there is increasingly a “clear division” between brokers that are putting the time into “proper preparation for these harder renewals and others who just leave it all a bit late”.
Savvy insurers are communicating earlier so that the information and quality data can be shared in a timelier fashion, he added.
Plessis suggested that risk managers need to be doing the same. “Risk managers need to make sure they are opening discussions with insurers about renewals as soon as possible, since many lines of business are still proving to be challenging. Working together to prepare as detailed and accurate risk information as possible, and working in close partnership with their brokers and underwriters, will deliver the best result for everyone,” he said.