Brokers need to get on the front foot and mirror fee increases of lawyers and accountants

That was the view of the panel debating the topic ‘the cost-of-living crisis and its impact on the insurance market’ at the Insurance Age Broker Breakfast in Leeds this week.

Chris Milne, regional director of WTW, said: “Clients are starting to really look at their supply chain and take risk more seriously because they have been hit by a number of different things. And it’s as if they are in a perma-crisis – it’s one thing after another. So they are taking that more seriously and see us more as risk partners.

“We are running two seminars this week on risk and how to help qualify that with risk registers. That is quite dry; we’d usually struggle to get people along. But we have 150 over two days, and that shows the engagement piece.”

He added: “And if you look at our peers in the professional services world, such as solicitors and accountants, they are absolutely hammering their clients with fee increases of 25 or 30 per cent. It is a massive bugbear of mine that as an industry we are not particularly good at getting on the front foot with clients and showing the value we can add.

“But oddly, we are having much easier conversations with our clients at the moment about pushing up fees because they value the work we do for them.”

It is a massive bugbear of mine that as an industry we are not particularly good at getting on the front foot with clients and showing the value we can add.

Chris Milne, regional director of WTW

Change in questioning

Michelle South, director of operations for Brokerbility, said: “What I am seeing from a client perspective is a change in that they are questioning how insurance programmes are structured. [They are] for the first time coming in and saying: ‘here is my insurance budget – you have got to make that fit for what my insurance needs are’.

“And we are seeing covers like cyber and business interruption being challenged. We are being asked if we can reduce indemnity periods. They are picking it apart without really understanding it. And this is where our advice is invaluable, so when they do have a claim, they have not cut back in the wrong places.”

She added: “There are non-advised clients doing click-and-buy who have very little understanding of what they are buying and are going to come unstuck at the time of a claim. Our services should not be undervalued and we should be shouting about them. But there are clients with only a certain pool of money and that is why premium finance is rife. They cannot afford to pay their premiums straight up anymore. It is strange time as I don’t think I have ever sat in front of a client who says: ‘You’ve got £15,000 – make it cover my insurance cover costs’.”

Andy Morley, group managing director for ProAktice, said: “The thing I would caution is brokers should not cut corners to reduce costs. I think at this point there are actually arguments for increasing cover looking at cyber, looking at credit, looking at things that really underpin a business.

“I think brokers generally sometimes get so focused, particularly in competitive environments when they are looking to save money to drive the premium down, but that is not the always the best thing to do.

“I would urge caution. Brokers are also feeling the inflationary pressures [of their clients]; we are in the same boat. I would echo [Chris] and say be bold, put your fees up, don’t be afraid to have that conversation with clients because they’re putting 10%, 20%, 30% on [what they charge] their customers. So we have got to be on the front foot with that too.”

Torturous claims performance 

Later in the session, Morley admitted he had some sympathy with insurers when it came to handling claims in terms of broken supply chains, adding: “The general performance of insurers around claims is dreadful. And reporting claims, especially motor, is torturous – being on the phone 25-40 minutes to report a claim. And then you have issues around feedback and updating, all the things that could be solved with more resources.

“One of the issues I have is that insurers often seem to have limited interest in providing more resource, not just for claims, but other functions. And that is where we as brokers stand in the way, because we have to defend insurers – most of our complaints are about [them] on claims.”

Speaking as a delegate in the audience, Romero managing director Simon Mabb agreed: “The service we get from insurers and loss adjusters is absolutely appalling. Getting through to them, getting decisions, getting wrong decisions, having to fix wrong decisions – it’s is a huge problem.

“A lot of it stems from many insurer [staff who] are still sat at home and making decisions that are not being referred to others. And once that decision has been made, they don’t want to change it. That is having a huge impact on brokers, especially commercial brokers.”

As the conversation turned to the use of automation and artificial intelligence in insurance, Morley said: “If every chief executive of every insurer could get rid of all their staff tomorrow, they would. That is fact. They have a laser-like focus on managing those expenses and that is what they would do.”

Milne noted it would be positive if these technologies could help brokers remove onerous tasks and spend more time advising clients, but echoed Morley by saying: “My concern is that it will be all about cost, about how we cut cost, and not about the experience for the client and making them delighted about the service they get. We have a risk of going down that route if we don’t get it right.”

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