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Green shoots slowly emerge in the hardest of hard markets
While we all know that, in theory, the insurance cycle is just that, a cycle. As sure as night follows day, a hard market will be followed by a softer market, but you’d be forgiven for wondering if that theory is a thing of the past. After all, we’re currently still in the longest hard market in most industry professionals’ careers. “I’ve been in the industry for 35 years, and I’ve seen four really hard cycles in that period,” says Andy Doran, General Manager, Underwriting, Commercial at Allianz. “This is the longest, and we’re now into year fve. We’ve seen double-digit increases year on year, and hardening prices. It’s not sustainable.” GREEN SHOOTS BEGINNING TO EMERGE? Resilience has been something of a buzzword over recent years, and brokers themselves have had to show signifcant resilience to help their clients get the cover they need. The on-the-ground reality, however, is it’s a tough, tough market, and one that can be incredibly testing for brokers. “There’s no magic bullet, there’s no unicorn, we’re all playing in the same market,” says Kylie Hull, Head of Regional Branches at Gallagher.
“Brokers are having to work two and three times as hard to place a risk. Money is tight for businesses, and often insurance is one of their biggest outgoings after salaries, so that puts a lot of pressure on brokers to minimise cost.” That pressure may be beginning to ease, however. There are green shoots of recovery. Capacity is opening up in London, and while we did see a brief glimpse of a softer market in Australia earlier in the year, the foods halted that easing. “There’s some new capacity emerging in the Australian market for SMEs, but larger clients may not see the beneft of that,” says Hull. “However, there’s a fair amount of new capacity in London, where these new entrants have not been impacted by claims, unlike the established insurer markets. For clients exhibiting a strong approach to risk management and those that are prepared to engage with insurers via presentations, there is good opportunity there, for example in the directors’ and ofcers’ marketplace. “To illustrate that, for one client we were looking at a doubling of premium if we placed locally. We’ve gone to London and we’ve actually saved them almost $200,000,” Hull added.
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