What causes insurance brokers a “world of pain”?
The most effective way for brokers to work with insurers in placing a complex technology policy is to make sure they understand it implicitly, he said. This means being able to efficiently and accurately identify the coverage required by the insured. Essentially, it is about discerning both the risks facing the business and how the insured can mitigate them. The broker will need to demonstrate an understanding of all areas of business, from employer liability to property, professional indemnity and cybersecurity.
“But when it comes to travelers,” he said, “the best way to really access the benefits and specifics of our formulation would be to engage early in the process. We encourage all brokers to work. as far as possible from renewal with us, [say] maybe at least six months for more complex clients. And what this allows me, as an underwriter, and my colleagues in risk management to work with both the broker and the client to visit the client to understand their exposures and really work with them on an on-going basis. advice.
Malford noted that getting this type of interaction, where you can explore existing controls and their associated benefits and work with a client to help them understand how spending on certain coverage will lower their premiums, is invaluable. This tripartite partnership between the underwriter, the broker and the client is essential to work towards a result that will make everyone happy.
Examining some of the major issues facing brokers in the space today, he pointed out that, especially in the tightening market, brokers face significant challenges. Take for example the area of cyber insurance, he said, where the market has hardened considerably over the past 12-18 months and shows no signs of slowing down while at the same time there has been an increase in prices. large-scale attacks.
Malford pointed out that incidents across the UK have demonstrated the vulnerabilities of networks to attack. He cited the example of a broker he spoke to who compared the current environment to London jewelry stores in the 1950s. At the time, no one realized the need for protection for these stores, he said. he said, but suddenly gangs attacked these businesses because these protections were not in place.
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“And this is what we are now seeing with the cybermarket, that these protections have not been put in place,” he said. “And as a result, you now have a number of criminal gangs exploiting the weaknesses of corporate cyber protection and exploiting companies in increasingly sophisticated ways to extort money from them. That, coupled with a tightening market, means we’re seeing limits cut in half, deductibles go up, premiums go up – all of which are causing brokers a lot of pain right now.
“Insurers pay claims, but they are increasingly worried about what could happen. And I think what you’ll see is more of that, more hardening up to a point where people get comfortable with it, and it just works out. Another point of potential pain that we hear anecdotally from brokers is the difficulty in finding coverage, which offers US jurisdiction. So in particular the American jurisdiction with an insurer rated AA. And I’m happy to report that Travelers falls into that category, we’re able to offer US jurisdiction, and we’re definitely an AA rated insurer, but [finding that] becomes more and more delicate.
These challenges, however, highlight new opportunities, Malford said, as brokers willing to spend more time with their clients to understand the risks they face and to invest time in their own training around those risks will be very helpful. to succeed. go forward. Sharpen their understanding of their clients’ exposures, particularly in cybersecurity, business disruption and employee compensation, and be able to demonstrate that this understanding is essential.
Brokers making this effort will see the benefits of a tough market, he said, and if they can give underwriters a sense of certainty that they understand the risk involved, and if they accurately present this. risk, they are more likely to obtain competitive terms from underwriters. Meanwhile, those who have not kept their customers up to date with market developments and warned them of potential premium increases and lower limits, may well find it difficult to maintain their business when they are subject to competition.
“If they cannot demonstrate [their understanding] to underwriters (and in the Travelers area to risk management consultants as well) and to give us this comfort and give others in the market this comfort, it will become more and more difficult for them to obtain competitive conditions ”, a Malford said. “So there are certainly opportunities for those who are willing to invest the time to understand [this risk] and present a full presentation to underwriters.
Listen now: How brokers can unlock the specialized attributes of a technology policy