The role of brokers in post-Covid recovery is critical to their future
Helping clients bounce back stronger in the aftermath of the pandemic is the biggest challenge brokers face today.
No business has been left untouched by the events of the past 12 months. Many of our clients, a diverse group spread throughout the globe, including businesses providing goods, services and logistics, have been badly affected by the pandemic.
I believe there is no more important role for any broker today than to ensure our clients have all the risk management support and insurance protection advice possible to get up and running and effectively trading as the recovery from the pandemic gets under way.
Some in the insurance industry are, however, distracted and looking inward to focus on the short-term opportunity of the hard market and the excitement of new capacity entering the market and what it means for their own business. I believe this is the moment to do the exact opposite and look outwards, focusing on the long term, and work as a market to meet the needs of our client base.
This is particularly true in those areas that have been most badly affected by the pandemic, for example the marine and aviation business. The International Air Transport Association has estimated the airline industry lost $118bn and saw demand plummet 65% during 2020.
The European Maritime Safety Agency recently reported a 9% annual fall in ships calling at EU ports, dropping by as much as 30% in the spring months of 2020. Sectors facing a crisis of this magnitude need flexibility of thought from across the insurance sector to help them get back on their feet.
So far, it is a bit too early to assess the response clients will receive in facing this challenge. Initial experience shows it is mixed to say the least, with some specific industries being handed rate increases in the hundreds of percentage points, at a point when they are on their knees.
Unsustainable levels
There is no doubt competition, low interest rates and excess capacity have conspired over the past decade and more to push rates down to unsustainable levels in some classes.
Before Covid, there was a degree of understanding and acceptance that in some areas rates did need to rise. However, as the pandemic recedes there is an acceleration taking place, which, if not carefully negotiated, could lead to an imbalance and a sense of unfairness.
Any responsible broker needs to challenge excessive rate hikes and work on behalf of clients, particularly those in classes such as directors’ and officers’ liability, where multi-digit rate hikes are being proposed. I believe the willingness of brokers to “fight their client’s corner” and offer a level of service that not only values speed and efficiency but demonstrates tenacity and willingness to put the individual client’s case rather than accepting accepting market conditions is vital.
Quite simply, this means as brokers we need to work even harder to get our clients the best deal in terms of coverage and price and be innovative and creative in accessing the right capacity on their behalf.
What can we take away from the experience of Covid to deliver more for clients?
The past year has shown us there is plenty that can be done remotely. In our own business we have managed to launch our new brand, open three international offices and bring on board a large number of new team members at all levels of the organisation, including me as a “work from home” chief executive for my entire tenure with the company so far.
However, as we enter a full year of restrictions, it is clear remote working also has limitations, particularly in relation to client service, business development and, perhaps most importantly, career development and training.
Face to face
For global specialty and reinsurance brokers like Oneglobal, there is no doubt getting away from the kitchen table and out to meet clients across the world is something we need to do as soon as restrictions are lifted. Clients need to see their broker face-to-face, as that is the only way to really understand their business risk management challenges. On the other hand, video conferencing has taken a massive leap forward and with the urgent need to address climate change, thankfully the days of flying to Australia for just one meeting are over.
While in-person meetings may have been off the agenda for the past year, the importance of technical broking skills and capability in the specialty and reinsurance classes has not. To deliver this level of expertise you need a diverse team – “star” brokers alone are not enough.
While it is always a source of pride to be able to attract senior brokers to your business, a strongly conceived apprenticeship or first job programme and a diverse approach that hires at all levels and delivers meaningful career development paths is needed. Key to the success of these schemes is a combination of learning on the job, training, life experience, collaboration and relationship building with clients and the market. All of that is very difficult to do effectively when working full-time from home.
As a result, I believe after Covid we will see a flexible, hybrid working model with a proportion of time spent in the office, dependent on job roles, personal circumstances and the needs of clients at any one time.
Building morale, culture and being mindful of training and development, we need to get the balance right to attract and retain an outstanding team that is increasingly more analytically skilled and backed by leading IT infrastructure and an outstanding operations team.
Learning lessons from the past year will be vital as the broker landscape evolves and competition delivers diversity to the broking market. However, as brokers we need to remember working diligently for our clients has always been the bedrock of what we do and this has never been more important than now. At Oneglobal, our clients can count on us to do exactly that.
Written by Oneglobal Chief Executive Officer, Mike Reynolds, this article first appeared in Insurance Day.