Winning & Retaining Insurer Capacity
In the rubble of a global pandemic that has ravaged the economy, the insurance market is rapidly hardening as insurers look to re-price their books of business. Under the weight of aggregators and the misconception that "cheaper is better", it's been too soft for too long. Corrections needed to happen.
Perhaps no part of the insurance sector is under more pressure than schemes and delegated authorities as insurers begin to reconsider where their capital is best deployed. As a result, brokers and MGAs with delegated authority are coming under greater pressure than ever to be a valued insurer partner.
But what does that mean? I went and asked the insurers themselves what their top tips were on obtaining and retaining capacity...
Director of Distribution
"One of the things insurers are looking at really closely right now is partners’ track record in compliance and in particular assessing their ability to meet with the likely future fair pricing requirements for personal lines customers in light of the FCA paper - this is as if not more important than the actual underwriting profitability of a relationship."
National Schemes Sales Manager
"Firstly, insurers want to see schemes with a clear and executable strategy around control and governance, but more importantly one that maintains accountability. Secondly, Hiscox wants to work with brokers and MGAs who believe in the importance of delivering an outstanding customer experience - this is something we're very passionate about. And finally, the most positive results often come from those with a pre-existing sector or market knowledge. Being a specialist, at the heart of an industry gives you unique insight and credibility regarding the things that are important to your customers."
Corporate Underwriting Portfolio Manager
"Play to your strengths. We have supported some schemes which were chosen by the broker because they have a personal interest in and passion for the work of their customers. Having a passion for a particular sector not only makes launching the scheme easier but, more importantly, it gives you access to people you may already know through shared interests. This could include having access to networking groups that will help you reach new customers. "
Head of SME and Scheme Operations
"Communication is essential, it is important to continue review meetings to ensure performance and strategy continue for both Insurer and Broker. It's important for both Insurer and Broker to listen and really hear what each other are saying and to deliver on what you say. If there are issues with anything, be it underwriting, service or performance address quickly and act. Finally, work together on new opportunities, with the changing world there is lots of potential!"
Former Chief Underwriting Officer of RSA
"There are three key requirements for obtaining and keeping capacity from an insurer;
Alignment of UW strategy. Any DA needs to make sure that the business they are seeking will align with the underwriters strategy and appetite. And this needs to be broader than just eg SME business and needs to get into the details. Underwriters have preferred business and vice versa and it is important that this remains aligned. Particularly for a new DA there is sometimes a desire to go after business on the edge of (or even way outside) the underwriters appetite and this causes a lot of friction.
Establish and manage the relationship with the insurer through multiple individuals. Don’t rely on one contact at the insurer as the DA needs ot understand the broader underwriting direction and key issues faced by the underwriter. This helps avoid sudden changes in the appetite of the insurer affecting the DA. Use these relationships to demonstrate why as a DA you’re a better partner for this business than a generalist broker.
Seek as long a relationship as possible – don’t try and move or renegotiate the relationship annually or you will find the underwriters patience wearing thin quickly. Become a long term partner not a transaction. And as a subset of this make sure you agree what party each party will play when it comes to regulatory management, data and analytics and access to/cross sell opportunities with customers."
One thing is for sure; 2021 isn't about to get any easier for the insurance industry. Insurance's biggest challenge has always been predictability - it's the nature of the beast. Being able to predict your performance and deliver on it is perhaps more important than ever.
Are these things top of your list when engaging with insurers?