With the current hard insurance market not likely to soften in the foreseeable future and insureds continuing to face financial pressures, how are brokers approaching their work? Here PIC Insurance Brokers chief commercial & client officer John Chandler (pictured) talks about how brokers can cement both their relationship with clients and their crucial role as an expert.
Speaking with Insurance Business, Chandler said: “In a hard market, our job becomes more challenging to deliver the service or the outcome that the insurer might want, so what we do is we adapt. One of the approaches we’re using that I think will be successful is getting back to why we built the client’s insurance programme as we did at the start.
“Often clients are busy and don’t always do a thorough review of everything. At an SME level, their time is very precious, so it’s about taking a bit of extra time to say, ‘Look, given the environment – the economy’s pressurised and all those sorts of things – let’s sit down and make sure everything’s correct for you so your programme is still delivering the outcomes you want or giving you the protection you want’.”
Another key element to it, according to Chandler, is ‘client choice’ and being able to provide policyholders those options as their broker.
“I think it’s really important, particularly in a hard market, to provide choices to the client,” he said. “The choice itself means that they are in control of that outcome. You then come away from ‘it’s a price increase’ to ‘I’ve chosen to do this, and I understand what the outcome might be’ – a higher excess or an increased price. So, you give back the control to the client, which helps them make a decision. It gets you away from just having ‘price has gone up; sorry about that’ conversations.”
The chief commercial & client officer said it’s these conversations, and how they’re changing, that will drive business strategy.
He told Insurance Business: “It’s important to understand what your strategy is in this market, but generally you wouldn’t change the strategy you have. You have a client strategy, which is based on your purpose – that shouldn’t change in the market conditions. What does change is the conversations you have with clients.”
When it comes to having those important conversations with clients, Chandler believes it all boils down to the relationship the broker has formed.
“I think if you get an engaged client, it’s very easy,” he said. “Any business owner or any person with their own life is busy, so it’s not top of the list to put aside two hours to understand the insurance market and all its dynamics every year for anybody. I think it’s not difficult if you can get access.
“The challenge with all these changes is building a relationship where you say, ‘Look, we really should sit down and talk about this more thoroughly’. So, that’s based on your relationship. If you’ve got a low-touch relationship, that’s much harder. If you have a much stronger, partnership-type relationship, then they will say, ‘OK, let’s sit down and talk about that’. Clients can understand; it’s just making sure that the time is taken with us.”
At PIC Insurance Brokers, Chandler is looking to make client relationships stronger by leading a holistic approach. He came on board half a year ago as the company’s first-ever chief commercial & client officer, bringing experience from both the insurer and broking sides of the industry.
“We do fire & general and life & health, and we’re trying to bring all of our client-facing people together in a coordinated fashion so that we can bring all of our expertise to the client,” he told Insurance Business. “We’re building this really strong relationship [by giving clients access to the whole of PIC]. It also means we build our reputation as a partner for people’s businesses.”
“One of the things I bring to this role is having spent a long time on the insurer side. I worked at IAG for nearly 20 years, so when we’re working on something between the parties – our business as the broker and their business as an insurer – I understand what they’re trying to achieve. On the other side of the coin, I also know what they need to agree to something or what they might like us to do to support them to get to the answer.”
Getting to those ‘answers’ to clients’ needs will continue to be challenging, making the opportunity for insurance brokers to do what they do best also bigger.
“At the moment, our challenge is probably the shifting sands of appetite, and price is a part of that,” Chandler said. “Different insurers are taking different approaches to either the industries that they do or don’t want to be part of, or capacity that they may or may not have. Their strategic business decisions, which vary across insurers, then impact us. What we’ll continue to see in this market is not just price; it’s also the ability to place risk.”
Chandler noted that, historically, New Zealand had been a “fairly straightforward” market, in that almost anything can be insured for a reasonably affordable price.
“What we’re now moving to is, in some cases, your asset may not be insured at all or fully. And that’s more difficult for clients to accept than a straight price increase because of inflation. It’s a different conversation to say we can’t place something or that we have to place it over a number of insurers.
“Claims inflation is an easy conversation because everybody gets it. It’s the other side of it – that the market is changing fundamentally and that some things may not be able to be fully insured going forward – that’s quite a different conversation and something clients [find it difficult] to wrap their head around.”
The former BrokerWeb Risk Services chief executive went on to highlight the impact of large weather events – which, if recent disasters are anything to go by, are only set to become more frequent and severe – on the insurance sector.
“When we have multiple or large events occurring, the industry simply isn’t resourced to manage multiple things like that,” Chandler told Insurance Business. “The large storm events in 2023 put a huge strain on that resourcing at the insurers’ end. Clients don’t have unrealistic expectations, but it was a whole year of work on that claim side and there was frustration as a result of that.
“The answer is not easy – otherwise, somebody would have fixed it already – but it’s about understanding the impact on our clients, who are mutual clients for us and the insurer. We gave them a promise when they bought the product… Because of a multitude of factors and storms, we’ve also had to work with councils to make decisions on land and buildings before insurers can make decisions. All of these things take a long time.
“That’s still the thing that’s probably challenging for everybody – we’re having clients renewing for policies where their claims might not have been settled for losses that occurred early last year. That is a challenging conversation.”
In Chandler’s view, each such event should have the industry thinking about possible learnings.
“We have to come back every time and think of how we can learn out of that and do better,” he said. “I think it’s mostly about working iteratively to say, every time we have an event, ‘What can we do better next time? What were the complaints? How do we deal with those? What does that look like?’”
As for the opportunities in the existing hard market, Chandler believes the biggest one is the chance to cement one’s role as an adviser.
He told Insurance Business: “If you understand your client’s business and you have a relationship, this is a really great opportunity to come back around and say, ‘The environment’s challenging – how can I help you? Let’s work through this because, at the end, I think it’d be much stronger.’ The opportunity for brokers is to solidify their relationship and their role as an insurance expert.”
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