With insurance underwriters now voicing preference for ‘best-in-class’ commercial risks, it’s fallen to brokers to educate their clients about how to reduce their losses.
And that means commercial brokers are becoming more like holistic risk advisors, making recommendations to their clients on loss control.
“We certainly have moved away from being a procurement-only type service,” Brent MacDonald, managing director of Marsh Canada said of the brokers’ shifting role.
“The additional value added by focusing on risk, educating the clients on risk, helping them understand best practices, that’s been an education for the clients as well. Clients are in a much better position going forward [since] we don’t anticipate seeing underwriting discipline changing much in the near future….
“We see a lot of our colleagues now talking about risk. That’s really the start of the process, whether it’s cyber, whether it’s about property valuations or it’s loss control. It’s all mitigation-focused. And then at the end of that dialogue, you start talking about insurance. I don’t know if that necessarily was the case six or seven years ago, after a long period of soft market conditions.”
In its 2020 Trusted Advisor survey, Canadian Underwriter asked 159 businesses about the service they received from their commercial brokers.
One question asked: “What topics would you want to hear about more?” Not surprisingly, 52% of the businesses surveyed said they wanted to hear more from their brokers about how to reduce their premiums. After all, it was the height of the pandemic and hard market conditions caused businesses to scramble to lower their costs during the shutdowns required by public health restrictions.
A full 31% of commercial clients participating in the survey said they wanted their brokers to talk more about emerging threats to their businesses. Another 30% said they wanted to hear safety tips about how to protect their businesses against property damage. And 26% said they wanted to know more about protecting their companies from cyberattacks.
Brokers said their commercial clients have upped their game to respond to the underwriters’ need for better loss control and risk-mitigation measures.
“We’ve just been through a period for several years in which our clients were spending a lot of time investing in risk-management strategies because they knew that they needed to be best-in-class in order to get markets to come to the table with competitive pricing,” added MacDonald. “We still see that and certainly that discipline has been ingrained into a lot of our clients that didn’t historically focus on risk management.”
Alongside clients, brokers also have upped their game in the arena of risk mitigation and loss control, observed Eric Osborne, chief growth officer at Navacord.
“Through COVID and the hard market, not only did we see inflation of values and prices, but there was also what I’d call a customer experience inflation as well,” he said.
“You needed to start delivering more for your clients in those times so you could continue to…retain those clients and demonstrate to them you’re providing the best solutions for them — whether it was risk control or, with larger clients, introducing captives or analytic services. I think brokers who did that grew their business through that era. I would call it the client ‘flight to quality.’
“Brokers rose to meet those expectations for their clients.”
This story is excerpted from one that appeared in the May print edition of Canadian Underwriter. Feature image by iStock.com/skhoward
