Brokers on Insurers 2021

Brokers on Insurers 2021

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For brokers and insurers, 2021 has largely presented a continuation of the challenges that arose in 2020. Fallout from the COVID-19 pandemic is still impacting the industry, while natural disaster claims have shifted from bushfires to floods. There’s also the added pressure of rising premiums in a hard market. And many brokers are still impacted by new commission structures across the industry, not to mention more competition from insurers themselves, who have established more online communication channels with customers.

In IB’s ninth annual Brokers on Insurers survey, brokers weren’t shy about providing unvarnished feedback for insurers, raising concerns about extreme premium increases and slow turnaround from underwriters. However, they also gave credit where credit was due, praising certain insurers for providing stability in a hard market and increasing communication during COVID-19.

The bad and the good

Brokers ranked commission structure, communication and training, and claims turnaround time among their top three priorities when choosing an insurer. The top category – commission structure – garnered few complaints from brokers, and insurers managed to improve their average score from 3.41 in 2020 to 3.44 this year.

Brokers were a bit less satisfied with insurers’ efforts in communication, training and development, awarding them an average score of 2.92 – which, while on par with last year’s 2.90, remains below average. Several brokers brought up communication when asked how insurers could improve their service over the next 12 months.

The type of communication is important, too: one broker pointed out that during COVID-19, it was “communication overload in the way of webinars, yet communication almost total blackout in the way of BDM support,” suggesting that brokers are looking for a more personalised approach.

Claims turnaround time, meanwhile, has been a stable category in IB’s Brokers on Insurers survey from year to year – but not in a good way. In this year’s survey, 64% of brokers said turnaround times have worsened over the last 12 months, while 34% said they had improved – roughly the same proportions as 2020. In addition, insurers’ average score in this category came in at 3.22, only a slight improvement from 2020’s 3.20.

Brokers acknowledged that the delay in processing claims could be largely due to COVID-19 restrictions and the recent spate of natural disasters in Australia. “Getting assessors out to regional and rural areas is an absolute nightmare,” said one broker, while another noted that “everything is slower and more disjointed as claims officers are working from home”.

Brand recognition and reputation – the fourth most important factor to brokers when selecting an insurer – was also virtu-ally unchanged from 2020. Allianz, CGU and QBE have taken the top three spots in this category every year since the first Brokers on Insurers survey in 2013, and this year was no exception. Overall, insurers’ average score did slide a bit, falling from 3.45 in 2020 to 3.34 for 2021.

Fifth among brokers’ priorities when choosing an insurer, BDM support took a hit this year. The overall average score fell from 2.85 to 2.73, and CGU took the gold medal with a score of just 3.27 – the lowest winning score in this year’s survey. While some brokers praised the support they receive from BDMs, many others complained about their lack of authority. “Poor old BDMs have all had their authority taken away. They have zero impact,” said one broker, echoing the comments of many others.

Insurers fared a bit better in product range and product innovation, earning an average score of 3.30 for product range (down slightly from 2020’s 3.41) and 3.15 for innovation (on par with last year’s 3.14). A few brokers mentioned innovation when asked what insurers need to change over the next 12 months. “Some of the insurers offer very archaic systems and products and are not keeping up with the latest demands,” one broker noted.

Brokers were less enthused about the all-important category of premium stability – perhaps not surprising, given the hard market. While 10 out of 13 insurers earned reasonable average scores of between 3 and 3.75 in this category, when asked if premium stability had improved or worsened during the last 12 months, a whopping 88% of brokers said premium stability has gotten worse, up from 79% last year.

While some brokers attributed rising premiums to the perfect storm of COVID-19, fires, floods and low interest rates (“The market is doing what we always anticipated would happen,” one broker pointed out), others felt the rate increases were unjustified. “I mean, I know it is a hard market, but this is the next level,” one broker said. Another noted that “as a broker, it is becoming frustrating hearing the book has been ‘re-rated’ and having clients not understand the whole picture of the market, especially when there are no changes to their business activities and turnover.”

 Although it was one of their lowest priorities when choosing an insurer, turnaround time on new business is clearly another sore point for brokers. While the industry average score slipped only slightly (from 3.30 in 2020 to 3.25 this year), 75% of brokers said turnaround time on new business has gotten worse over the past 12 months – and many of them put the change down to COVID-19-mandated remote work arrangements.

“Some working-from-home arrangements have caused some underwriters to stay elusive,” said one broker, while another complained that “people working from home may be more productive from an insurer point of view, but they definitely are not from a broker point of view”. Others attributed slow quote turnarounds to a lack of skilled under-writers – or a lack of underwriters altogether.

Online platforms were also relatively unimportant to brokers when choosing an insurer. Brokers gave insurers an overall average score of 3.02 in this category (down from 2020’s 3.16), and the three medal winners’ scores fell slightly from last year as well. Respondents had a smattering of complaints about insurers’ online systems but were generally more concerned with other aspects of service.

Finally, the category of overall service – ranked last on the list of things brokers consider most important in an insurer – remained stable from 2020. This year, brokers gave insurers an overall average score of 3.22, compared to 3.21 in 2020. However, they had plenty to say about the service they receive from insurers – and particularly how it has been affected by COVID-19.

On that point, feedback was mixed. “It seems that insurers have become harder to contact, have slower response times, are more restrictive [with] covers and are significantly increasing premiums,” said one broker. But some offered a very different view: “COVID generally has had a positive impact, has enabled more and better communication,” said another broker. “Clients have more time to review and question their insurance.”

The top insurers of 2021

Despite the sometimes scathing feedback from brokers, three insurance companies managed to rise to the top and claim medals for Insurer of the Year. CGU fell from last year’s second-place finish but still managed to nab bronze with an average score of 3.39 out of 5. This year’s silver medal went to Berkshire Hathaway, which achieved an average score of 3.48 across all 11 categories. And last year’s bronze winner, Berkley Insurance Australia, grabbed gold with a respectable average score of 3.67. Seven other insurers – AIG, Allianz, Chubb, Hollard, Liberty Specialty Markets, QBE and Zurich – managed to earn medals in one or more categories.

Berkley’s gold medal was due in large part to its solid performance in categories where brokers were mostly disappointed with other insurers: communication, overall service, new business turnaround time and premium stability. A broker who awarded Berkley the maximum 5 points across most categories commented: “It’s a hard market, and Berkley has been a standout on premium stability.”

Silver medallist Berkshire Hathaway likewise triumphed in some critical categories, earning gold for commission structure, premium stability and claims turnaround time. One broker who gave Berkshire Hathaway 5 points across all categories praised them for improved turnaround times on claims.

CGU clinched the bronze with an overall score that remained relatively stable from last year (3.39 in 2021 versus 3.41 in 2020) and standout performances in BDM support and online platforms. One broker who awarded CGU 4s and 5s in all 11 categories reported that “the BDM support has been good as always” and “the premiums available for products and services are getting a little better than last year”.

Methodology

Brokers from across the nation were invited to rate the performance of a selection of insurers currently operating in Australia. To ensure results were relevant and timely, respondents were asked to rate only those insurers they had dealt with in the past 12 months.

Thirteen insurers were rated by brokers in this year’s survey: AIG, Allianz, AXA XL, Berkley Insurance Australia, Berkshire Hathaway, CGU, Chubb, HDI Global Specialty, Hollard Commercial, Liberty Specialty Markets, QBE, Vero and Zurich. Brokers rated each insurer’s performance on a scale of 1 (very poor) to 5 (very good) across 11 different categories.

For each category, insurers were ranked in order of merit according to an average score calculated from a tally of their ratings. The top three companies in every category received a gold, silver or bronze medal. Insurers’ combined average score from all categories determined the medallists for Insurer of the Year.

Winners

  • Commission Structure
    GoldBerkshire Hathaway 
    SilverBerkley Insurance Australia
    BronzeCGU
  • Broker Communication, Training and Development  
    GoldBerkley Insurance Australia
    SilverBerkshire Hathaway
    BronzeCGU
  • Turnaround Time – Claims
    GoldBerkshire Hathaway
    SilverBerkley Insurance Australia
    BronzeChubb
  • Brand Recognition and Reputation
    GoldCGU
    SilverQBE
    BronzeAllianz
  • BDM Support
    GoldCGU
    SilverBerkshire Hathaway
    BronzeBerkley Insurance Australia 
  • Product Innovation  
    GoldBerkley Insurance Australia
    SilverBerkshire Hathaway
    BronzeChubb
  • Product Range
    GoldBerkley Insurance Australia
    SilverCGU
    BronzeChubb
  • Premium Stability
    GoldBerkshire Hathaway
    SilverBerkley Insurance Australia 
    BronzeLiberty Specialty Markets
  • Turnaround Time – New Business
    GoldBerkley Insurance Australia
    SilverBerkshire Hathaway
    BronzeHollard Commercial
  • Online Platforms and Services 
    GoldAIG and CGU (tie)
    SilverHollard Commercial
    BronzeZurich
  • Overall Service Level​​​​​​​
    GoldBerkley Insurance Australia
    SilverBerkshire Hathaway
    BronzeCGU
  • Insurer of the Year​​​​​​​
    GoldBerkley Insurance Australia
    SilverBerkshire Hathaway
    BronzeCGU