Quake experience spawns knowledge growth for broker

Quake experience spawns knowledge growth for broker | Insurance Business

Quake experience spawns knowledge growth for broker
One of the positive consequences of the Canterbury earthquakes, says Willis New Zealand Southern Regional Manager Steven Hills, is that he is so proud of his team’s response to that life-changing event.

When asked what the highlight of his career is, he responds: “Being part of a team that lived, cried, dug deep and helped each other get through the biggest challenge of our personal lives and careers following the events of Feb 11.”

He adds: “We are very much a tighter team. Yes, there’s business to be done but it’s also about what you can do for each other.”

It’s also about what they can do for their clients, and in that respect Hills says his team’s technical expertise has really sharpened up.

That’s because living through the earthquakes and their aftermath has given them a greater understanding of what risk is about and also because the understanding has grown amongst a broader base of their clientele.

“There is now a greater level of technical expertise applied to clients at mid-market level rather than just the high end corporate as these clients have become more sophisticated buyers of insurance,” says Hills. “Consequently the broking fraternity has needed to upskill.”

He is quick to add that it’s not that they didn’t do it well in the past. “But I think we do it a lot better now.

“With clients now buying into the process more, we can reach a better understanding with them of how we need to analyse risk and in turn it shows them a clearer picture of how much insurance they need to buy and not necessarily just what they want to buy.

“Anyone can go and get a set of quotes but it’s important to ask ‘how do you apply that?’ You’ve got to understand the client’s business, understand the needs of that business and overlay a product that works,” he says.

Having seen what can happen after a severe earthquake, Hills says clients now have greater awareness of the risk exposures for other perils such as fire, storm and flood.

More time is spent on how they can identify these risks, measure their frequency and severity and take risk management steps to mitigate these risks.

Seismic risk assessments are now more commonplace; and there is far greater awareness for Business Continuity and Disaster Recovery planning.

Business Impact Analysis (BIA) work is also more common where brokers look at the resilience of a business and consider not necessarily what can go wrong, but more what needs to go right and the resilience of these dependencies to maintain equilibrium, says Hills.

The rising premiums that resulted from the earthquakes have made clients become more aware of their ability to hold higher levels of deductible, says Hills.

“It used to be mainly the larger corporates for whom we undertook a financial analysis of their ability for the balance sheet to take higher retention levels. But now this is commonly done for clients at a mid-market level also.”

Another noticeable change at mid-market level is the increased assessment of Maximum Foreseeable Loss (MFL) and Normal Loss Expectancy (NLE) for property insurance.

Meanwhile, the Christchurch Willis team has been enjoying some peace of mind in their own property – a new-build office in Hazeldean Business Park, Addington which they moved into nine months ago.
While the rent increase of 250% was not ideal, it’s just the market reality, says Hills, as the anticipated choice of premises in the CBD has not materialised.

Willis’s original home, on the corner of Montreal and Cashel Street, suffered major internal damage after the February quake and apart from one chance to retrieve around 80% of their files they weren’t able to go back in. The building has now been demolished.

They spent two and a half years in temporary accommodation in Riccarton, a rather cramped former accountant’s office which was divided into offices rather than open plan, forcing the 19-strong team of staff to cram in together and share small spaces.

“We’ve now got 100-150m2 more space which is fantastic as the team has got the space to breathe,” says Hills. “It’s got new furniture, and a new design.”

Even better though, he says:  “The building is over 100% of the code so when there’s an earthquake, and we’ve had a couple, not major, but when it has rattled we know this building will hold up. We’re in a safe environment.

“So it’s fresh, it’s clean and we’re happy. And normally when the guys are happy that’s when you get the best out of them.”