Brokers are failing to make risk management a central part of client conversations, even as insurers develop tools to price businesses according to how seriously they take it, according to Kieron Burrows, head of broking and distribution at eCovers.
Burrows said risk management is still treated as a cost rather than an investment, partly because brokers routinely look to insurers to fund it. When a client is asked to pay £1,500 to £5,000 for risk management while a competing broker makes no such recommendation, the service becomes harder to sell.
“A hundred percent, they don’t. They really don’t,” he said when asked whether brokers sell it enough.
Brokers tend to stick to the products they know, he said, and may only think to offer risk management at renewal. “At the point of sale, they’re just looking at what their bottom line is. That’s all they’re worried about.” Burrows attributed that partly to the pressure to meet sales targets.
A visit usually shows quickly how committed a client is, Burrows said. “You can wander around their premises in two minutes, you can figure out whether they’re in for risk management.”
At a concrete company he worked with years ago, older workers sat beside loud machinery without ear defenders until the business made them compulsory. A year later, the site had changed, but wood chippings were piled beneath tables and packed into window grates in another part of the premises, close to large space heaters. By the following visit, that area had been cleared too. Burrows said the improvements came from recognising hazards that were relatively simple to fix.
At an airline food manufacturer whose employers’ liability cover his team handled, the annual premium was around £1 million against about £1.1 million in claims. On the first visit, a colleague slipped within a minute of arriving and an unsecured trolley rolled down a ramp into his boss. The firm overhauled its practices, including installing cameras, and Burrows said its claims had dried up within two or three years.
The obviously hazardous sites and the pristine ones tend to be receptive, he said. The latter mainly want reassurance that what they already do is enough. Businesses in between can be harder to persuade: reasonably tidy, with long-serving staff and little appetite for a further £5,000 outlay. “They’re the ones that will probably never buy it, who probably do need it.”
Burrows expects insurers to become more selective as they use AI to identify risks they believe are likely to produce claims. Faced with a client showing no interest in risk management, he said, an insurer’s thinking could be: “We’ll either put up a really high premium or we’ll let an MGA have it.”
He argued that many insurers would accept a smaller book in exchange for better profitability, and that AI could help them make that choice. Brokers with their own systems can already assess whether a prospect is worth pursuing and might become a poor risk in five years’ time, he added. Burrows believes some insurers already use AI to decide whether a risk reaches an underwriter for a quote, leaving the underwriter to set the rate.
Burrows expects a very soft market within five years, alongside “potentially a big gap between what some people are paying and what others are paying.” That gap, he said, could finally persuade more clients to pay for risk management, although he expects the service itself to become more expensive.
