The importance of understanding client and broker needs in a hard market
The first hard market since the early 2000s has many similarities with the events that followed the shock of 9/11. Accessible and cheap capital had sustained the soft market. Some markets had begun to harden before 2020, however Covid-19, like the Twin Towers before it, has brought uncertainty to the financial markets and businesses alike.
These two components of capital allocation and business sentiment have driven insurers to truly focus on their underwriting results to ensure access to long-term capital financing. The ones that will succeed and outperform during this part of the hard market will be the ones that really focus on their clients.
It is in these difficult times when brokers and insurers alike can demonstrate their real value to the wider economy. Insurance is a mechanism for transferring risk from a business's balance sheet to an insurer's, allowing business owners to free up capital to develop and grow their businesses. This is when professional advice and knowledge comes to the fore.
Here at HDI Global SE, we recognise this need to support our clients. This means trying to engage with our clients and broker partners earlier and more intensely, to ensure that we can take care of the unexpected and foster entrepreneurship. We look to do this by focusing on three key areas-¦
SKILLED AND SPECIALIST
We train our people to be specialists. Brokers and clients therefore have informed and knowledgeable contact points that know their industry sectors and who can articulate the thought process around risk pricing coherently. As insurers, we should look to be clear about our decision-making. Clients need to know why their price has increased. Our people have insight into their business lines that can explain sector-specific claims inflation trends, loss severity hotspots and risk profile overviews that are different for each and every client.
HONESTY AND OPENNESS
If a client is likely to be impacted by significant pricing changes, informing the broker and client as early as possible is fundamental. Brokers add real value by bringing knowledge and understanding of their client to the underwriter, while also explaining insurer rationale. For this to truly work, that communication needs to be open and honest. This allows clients to review options, adjust budgets and plan their business for the longer term.
It is not about price. Clients need options in a hard market. They can only get good options if underwriters are close to their brokers and have time. These options can include cover, capacity or deductibles. HDI Global SE encourages early engagement so we can demonstrate our entrepreneurial capabilities to help get the best terms for the client.
It is times like these that working with brokers to understand clients' needs becomes more important than ever. Our distribution management team is well positioned to support brokers in the months and years to come.