A falling rate makes for an easy renewal conversation, but doesn’t make for an easy job. Rob Kemp (pictured), CEO of commercial risk at Aon UK, said when the soft market will level out is still a question for the crystal ball, but either way the pressure isn’t easing.
“The broker’s job in a soft market is as challenging as in a hard market, just in a different way,” he said.
Clients are sitting on far more data than before and want more control over their programmes. Premium savings remain part of the picture, but buyers increasingly want help articulating why they transfer some risks and retain others, and a view on how their programmes will hold up against the cycles and volatility ahead. That is pushing alternative capital further into the conversation.
The supply side has moved too. More carriers have entered the parametric and structured alternative risk transfer space, bringing fresh capital into that part of the business.
The market has historically treated parametric cover as an alternative to traditional capacity, when the more useful conversation is about cash flow. Used alongside conventional insurance, it adds a different form of capital that pays out faster and in a different way and can be adapted as a client’s exposures change.
“I don’t see it as a parametric or non-parametric conversation,” Kemp said.
The question is less whether parametric cover can replace part of a placement, and more where faster liquidity after a loss would make a real difference to a client’s business.
The same logic is driving interest in captives. Clients are increasingly looking at all their risks together, not line by line, and want to retain risk in a more strategic and structured way than before. A captive is one route to that, and Kemp expects the UK captive landscape to be an interesting one to watch, with a bespoke UK captive regime from the PRA and FCA due to launch in 2027.
Those conversations are coming from both directions. Clients are far more aware of captive retentions, parametrics and other alternatives as their exposures shift, whether through cyber or supply chain risk. But the broker’s job is still to table every option, form an opinion and base it on fact and science.
This shifts the focus upstream, with greater emphasis on understanding the risk and exposures and identifying the full range of capital and capacity options before approaching the market. More often than not, the outcome will still be a placement.
“The broker’s role is not just placement, it is everything that goes on before it,” Kemp said.
Increasingly, that means being able to have those conversations at multiple levels within a client’s business. Data is accelerating that shift. Clients routinely arrive with large amounts of information and ask for help understanding what it means for their programme. For Kemp, AI’s value lies in freeing up time for exactly that work, though its output still needs the same interpretation and sense-checking as a spreadsheet of declared values always did.
None of this is a new idea, and the role is one he hopes brokers have been playing for a long time. What has changed is the range of capital on the table and the sophistication of the clients asking about it.
As rates soften, the advantage looks set to sit with those who can make the case for alternative structures in terms clients actually feel, such as liquidity, volatility and control, rather than leading on price.
