Whether in his capacity as group chief broking officer for BMS Group, as an early member of the Insurance United Against Dementia (IUAD) campaign, or as a member of the Lloyd’s council, Richard Dudley brings a unique perspective on the trends shaping the reinsurance and insurance markets today.
In conversation with Insurance Business, Dudley (pictured) shared his perspective on the ways in which the broking industry has changed – and the ways in which it “really hasn’t changed at all”. There remains a strong emphasis on face-to-face relationships, but also on working with partners who have the ability to harness and use the right information to back up decision-making. “Those are all things which have been there ever since I started,” he said.
Something that has changed is the role that data and analytics play in shaping that information-gathering process. “That was at a very early stage in the reinsurance business, only when I first started and now it’s quite pervasive across every part of our business, including the insurance side, and that helps us to understand risk in a very different way. It helps us to be more precise about pricing and to be more accurate in how we build our perspective of different risks.”
With that in mind, Dudley said, it has been interesting to see the expansion of the role of the broker. The core of a broker’s role is to find capital that addresses a client’s risk, that’s what they’ve always traditionally been employed to do, irrespective of which part of the market in which they operate. However, things have moved on, and brokers are finding themselves doing more of the things that traditionally would have sat with the underwriting community.
“So, underwriters are building portfolios, underwriters are building a collection of risks together and trading groups of risks in a way that they didn't before,” he said. “And that’s [visible] from the development of broker facilities in the marketplace. We never used to have that, so that has changed dramatically.”
The other significant development that he has seen is the way that buyers' habits are changing. They’re now asking different questions, he said. They are still interested in their property risk, and their directors and officers risk, and their cyber risk, etc. “But they're now actually interested in their overall business risk and how we can address that more holistically. We get a lot more questions that require an advisory response, rather than just a transaction. So, that has changed a lot over the last 20/30 years.”
Reflecting on some of the core challenges that he sees facing the re/insurance broking market today, Dudley highlighted that it’s not just a question of challenge – but also of opportunity. At every stage in his broking career to date, he said, he has seen that there’s a real interplay between challenges and opportunities, and it’s down to insurance brokers to see how the former can lead to the latter. “It has always been like that, there have always been hugely positive opportunities, and there have always been challenges.”
Generally speaking, he said, the fact that brokers are paid on transactions and the fact that the relative size of that payout is quite often linked to the premium paid, means that market conditions do impact brokers. “We’re in a state where the market is quite soft in some areas… whether that's in UK retail or here in the London market. So that can provide a challenge in terms of top-line growth. But I still think there's plenty of opportunity in that, because there's so much change happening.”
For instance, he said, despite certain geopolitical shifts and regime changes having some knock-on impacts on certain areas, including climate change, there’s still significant economic investment going into climate resiliency and reducing carbon emissions. All that investment requires insurance, which is a real opportunity for the industry to be at the forefront of supporting the energy transition in a meaningful way.
An area of ongoing challenge is around attracting and retaining top-tier talent, which is especially relevant given that there’s a finite amount of talent available in any industry.
A key to success is being part of a business with a great story to tell and a strong focus on a collaborative culture. It’s those elements which attract the best people but, even more importantly, it’s what makes them want to stay because they want to be part of the growth story as it unfolds.
“So talent is definitely a challenge, top-line growth is a challenge, and organising yourself to think about your business as a whole rather than as lots of different individual businesses, that’s another challenge that I think brokers are having to think about,” he said. “That goes back to my point about building portfolios – when you’re thinking about placing or analysing portfolios of risk – those exercises tend to span across traditional team boundaries. So, brokers have to find ways to execute on that internally. None of that is impossible, it’s all very doable. It just requires a slightly different mindset.”
