REVEALED: how corporates rate brokers and insurers

Major insurers and brokers are failing to keep up with the rapidly changing demands and expectations of the UK’s largest corporate businesses.

That is the key finding of The UK Corporate Insurance Buyers’ Survey 2015 produced by StrategicRISK, aimed at leading risk professionals.

Research was undertaken in the fourth quarter of 2014 among a cross section of StrategicRISK’s UK readership of corporate risk managers and insurance buyers representing FTSE 250 companies or those of a similar size in the private sector.

Although they remain solid on traditional industry basics, insurance and broking firms need to evolve significantly to maintain relevance for corporate clients. From a perceived lack of innovation to concerns around understanding fully the constantly shifting nature of globalised commercial requirements, the service provided often falls short of what is or will soon be needed by insurance buyers and risk managers.

Failing to keep pace

Many insurers and brokers provide exceptional service to clients, but it is often patchy or sector specific. One respondent said: “Some insurers are delivering what we need with some products, but if we are talking about insurers delivering across the board then the answer is no … insurers are failing to keep pace with the complexities of large multinational organisations in terms of understanding our needs and, for some, their ability to deliver anything that is of value aligned to those needs.”

Survey respondents were able to talk freely and frankly in exchange for anonymity – and they did. Claims was one area that elicited some particularly strong responses. “Certainty of payment is absolute when it comes to claims,” said one respondent. Another, citing a previous bad experience, said their company judged insurance partners “in terms of claims settlement, attention to detail and flexibility”.

Claims battleground

Problems with claims were potentially fatal for the insurance partnership. For example, one insurer was lambasted for turning claims into a “battleground” because they “lost the plot” in terms of who was dealing with them. Ultimately, this insurance buyer terminated the relationship.

On brokers, many respondents were critical of the changing nature of the market, with one suggesting that the broking industry had “cannibalised itself” and “left large corporates with less choice” and “less recourse to alternatives and innovation”.

Clearly, while the needs of every individual business are unique and depend on a range of often different factors, some overall conclusions can still be drawn about the state of the UK insurance and broking industry in relation to large corporate clients.

It’s not all bad …

With risk managers and insurance buyers able to speak anonymously, many took a tough line on what they thought was needed in the changing market, particularly during the longer supplementary interviews conducted with respondents.

As a result, although criticism is extensive, broadly speaking the results still indicate most insurers continue to provide a viable and valued service for corporate clients. Seven of the largest insurance companies featured in the survey scored more than 4.00 out of 5.00 in terms of overall general service, which indicates an appreciation of insurer performance among risk managers and insurance buyers.

Bespoke solutions

Look beyond the top line, however, and there are inconsistencies across the board, with no single insurer getting close to service perfection in anything other than specialist areas (FM Global). Many respondents cited irritation at being offered “products” rather than “bespoke solutions” to their unique business situations. 

Not all insurers are culpable, but the industry as a whole has some way to go to rectify this, particularly around more complicated and technological issues such as cyber.

Meanwhile, the broker space has undergone substantial change in the past decade on several levels, with a greater emphasis on risk consulting and other services. 
Yet corporate clients tend to dismiss many such service offerings. Innovation and tools for better understanding risk was the only area of broker operations that participants consistently rated below 4.00, scoring 3.92. This indicates that appetite is limited for some broker services, with several respondents calling them “irrelevant”. 

One respondent said that being proactive should not mean “the broker trying to upsell things … they do too much of that”. Another said: “Brokers are generally very good at doing what you ask them to and not necessarily what you need.”

Indeed, overemphasis on non-specific sales is also criticised, with one interviewee imploring brokers to ensure “service does not come a poor second to selling products”.

‘Less choice’

Against this background of diversification in terms of providing new services, the broker dynamic has also shifted, with two major players, Aon and AJ Gallagher, growing rapidly through acquisition.

While this has boosted the big firms’ market share, it leaves large corporates with “less choice” and “less recourse to alternatives and innovation”, one insurance buyer said.

Others argue that many brokers have become detached from customers because of their size and bemoan that by trying to be “all things to everyone” they end up providing little of genuine or meaningful value.

Yet, while large brokers continue to grow, it is the people working within them that matter most to those surveyed.

One insurance buyer said of their broker: “There are some very credible individuals working there, so much so that these people are now engaged in dealing with our senior management who are far higher up in the organisation than I am – and this is excellent.”

What corporate insurance buyers want from insurers:

• Long-term partnership but, as one commented: “We have to constantly remind them that our relationship is not something that should be taken for granted”
• Recognition of good risk management and corporate governance “reflected in the pricing of my risks”
• Not invoking or ‘hiding behind’ reservation of rights “I am not interested in an insurer that will invoke an automatic reservation of rights”
• Continuity “We changed a key insurer, primarily because of changes in personnel”
• Flexibility “Too many insurers still operate in silos such as cyber”
• Time to be creative “We are not looking for off-the-shelf products but bespoke solutions and that does not happen overnight”

What corporate insurance buyers want from brokers:

• More choice “Unless you want to be particularly adventurous, you are left with a choice of three or even two brokers and that is really not a healthy situation”
• More expertise “[There has been] a reduction in the technical approach among larger brokers”
• Openness “It must be an open relationship and very much a tripartite one. We need to be one team”
• Fee transparency “It would concern me more that I did not know rather than the actual details of who receives what”