How to survive and thrive in a hardening insurance market

Is this the most challenging insurance market you’ve ever experienced?

That was the question we asked 150 insurance broking and underwriting professionals during our recent hard market webinar. Unsurprisingly, the answer was overwhelming ‘yes’.

Hard Market

Demand for insurance is exceeding supply for the first time in 20 years. Capacity is tougher to come by, competition is limited, premium rates are increasing, coverage is contracting, and insurers are being more selective with risks (especially property, financial lines and professional risk exposures) and disinclined to negotiate terms. Similarly, underwriting standards have tightened significantly.

So, what can be done? How can commercial insurance brokers maintain a competitive advantage during these really challenging times (both hard market conditions and the wider economic impact of the global Coronavirus pandemic)? How can they overcome challenges and realise opportunities (like a phoenix from the ashes, opportunity does arise out of adversity)? How can they maintain and even improve relationships with underwriters and customers?

Webinar panellists Richard Blackburn, MD North East Region at PIB Insurance Brokers, Martin Camp, Divisional Director and Head of New Business at Aston Lark and Fay Reinhold-Shor, UK Regional Manager at Zywave, joined Artesian-DueDil CEO Andrew Yates for a deep-dive debate into the state of the market, combating relationship strain and how to drive a return to better days by harnessing data science. Here is what they uncovered…

Why is this the hardest market for 20 years?

There were signs of market hardening pre-covid – big claims coming out of the US, increasing claims costs generally and a spate of flooding all contributing. But without stating the obvious, what makes this hard market strikingly different from those of previous decades is the impact of Covid-19.

Covid-19 acted as the catalyst to a perfect storm for commercial insurance brokers. Most significantly, lack of accessibility to insurers and underwriters, and reduced capacity on the market.

As reinsurers began imposing terms on insurers, many drew back or exited completely from some lines of business. In financial lines and professional risks such as D&O, ML and PI insurers began picking up risks they didn’t even realise they were exposed to when the policies were first written, reducing their appetite even further.

The rapidly changing circumstances of clients also became a huge challenge as regular sources of data became out-of-date quickly, and therefore tougher to verify and validate.

Has the hard market put a strain on underwriter-broker relationships?

‘Yes’ said 70% of respondents, and our panel concurred. Rates are being driven up and frustration is bubbling away, but ultimately in a hard market, underwriter-broker relationships are more important than ever. Brokers do, after all, need insurers as much as they need clients.

Hard Market

This can be overcome by getting ahead of the game. Work further out from renewal (even as much as 6 months out) to start gathering more detailed information about customer needs and exposures to assist underwriter decision making. Improve due diligence processes to help speed up execution. And strive to understand and empathise with the market pressures being imposed on insurers, so you can work in a way to make life easier for them, and yourself, by presenting the right information and expediting the process.

Pull out all the stops to maintain these relationships.

What is the biggest opportunity for broker success during a hard market?

With so much disruption in the market, the greatest opportunity for brokers today is new business.

Take a value-based approach, and harness data and insight to free up time for customer-facing activities whilst simultaneously improving accuracy and efficiency. Improve prospecting by shining a light on areas not being covered by incumbent providers, to surface unique insights for tailored service provision, customised content outreach and relationship building.

Right now, brokers need to up their sales game. Most businesses will have faced some of the biggest challenges ever experienced over the last 18 months, so they’ll be out there shopping for insurance. In a hard market, the differentiating factor isn’t just price, it’s also what brokers have to offer their clients – that all-important value proposition stuff. Harnessing structured and unstructured insights provides new opportunities to engage, establish credibility, and create new leads with well-timed, contextually relevant outreach that differentiates the broker from their competitors and increases their chances of securing that next meeting:

  • Engage with purpose – Insurance brokers are always consultative, not transactional, but this is more important during a hard market. It’s about building stronger relationships, being purpose-led in interactions with clients, and being proactive in caring for, and ideally one step ahead of, their needs. Vitally, brokers must harness intelligence to ensure they are always relevant to the client landscape, aligned to needs, and deliver on that all-important long-term value factor.
  • Adopt a consultative approach – trust and credibility are king for insurance brokers operating in a hard market. It has never been more important for insurance brokers to establish themselves as a trusted advisor to their clients. A deep understanding of a customer’s businesses will ensure a broker is better able to help them navigate the impact of market conditions, anticipate their needs, evaluate their risk exposures, and therefore present better submissions to underwriters.
  • Secure coverage – During hard insurance market conditions, it’s essential for brokers to prepare and present high-quality insurance submissions to an underwriter. It really is a case of the more information the better. Leveraging data-driven customer intelligence will make sure there are no knowledge gaps, and that the submission process is aligned to customer needs as well as the requirements of tougher risk-averse underwriting conditions.
  • Cultivate the existing book of business – operating in a hard market means being more efficient and keeping costs under control – doing more with less. Key to achieving this is for insurance brokers to generate more value from their existing book of business. Likewise, in a hard market clients will be expecting more from their broker. Upselling and cross-selling means that not only are policies per account more profitable, but it fosters a stronger sense of trust, establishing the broker as an advisor rather than simply a service provider. This in turn increases customer satisfaction and retention.

What should brokers be doing differently during a hard market?

96% of respondents stated that they have had to adapt their sales and renewal process, and our panellists had several nuggets of advice to share based on their own experience.

Hard Market

Firstly, as mentioned previously, engage earlier in the process – both with clients and underwriters. Also make more use of resources, knowledge, and the expertise of your entire business – bring in your colleagues in risk management and those with sector specialisms to provide comfort for both clients and insurers.

Secondly, diversify your offering. Insurance brokers have a unique opportunity to marry their fundamental understanding of commercial risks, and core strengths as trusted advisors to deliver a suite of risk management products and services – helping their clients reduce premiums, improve terms, and reduce the potential for claims.

Finally, invest in improving the client experience through advances in technology and data analytics. The ultimate goal of every commercial insurance broker is to provide such a high level of service that clients simply cannot imagine doing business with anyone else. In today’s hard market that means doing more than simply selling insurance – they must consistently add value, engage regularly and contextually, be proactive in understanding needs, deliver tailored client experiences, and provide essential business-critical insights and specialised advice.

When will things get better?

Our panellists and respondents unanimously agreed it would take between 1-3 years to recover. As rates go up there will ultimately come a point when capacity providers see an opportunity to write profitable business. Likewise, after such a huge cleansing of insurer books, there will be a trigger moment in their appetite to write business again.

But until then, brokers will need to continue working smarter…

If you missed our webinar – don’t worry, simply watch at your leisure.

Artesian-DueDil is on a mission to help brokers survive and thrive in hard market conditions

Unless you’ve been living under a rock, you will have heard that Artesian and DueDil have merged.

This means our insurance customers, whether brokers, underwriters, MGAs, insurers, or reinsurers, can access a more advanced ability to drive value.  By combining DueDil’s Business Information Graph and Premium APIs with Artesian’s powerful web application and advanced rules-based insight engine, our insurance customers can harness:

  • Rules Engines – create bespoke solutions using customised company data
  • Customisable risk and compliance management – the combination of DueDil’s Business Information Graph (B.I.G) and the Artesian Connect rules engine enables the implementation of unique KYB, onboarding and in-life monitoring processes
  • Real-time data – billions of connections and real-time insights, relevant to both current and future customer relationships
  • Artificial Intelligence – drive advanced customer experiences through the optimal decision making and operational processes
  • Customisable Decision Engine – make split-second, error-free decisions that free up resources, lower risk, and deliver new highs of efficiency

Get in touch with one of our experts today.