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.

THE NEED FOR A LONG-TERM APPROACH

Looking longer term, Doran believes a fundamental shift is needed in how we deal with the sustainability of insurance and our resilience as a country to natural disasters.

“It’s increasingly important for federal and state government and insurance bodies to look at how we build resilience and how we approach urban planning because otherwise, we’re going to end up with a really impacted society that cannot get insurance.

“How we collate and collect risk data is going to be vitally important too, to help insurers diferentiate between a good risk and a poor risk,” Doran added.

Taking the positives from a testing fve years or so, Hull believes the experience of working through this prolonged hard market, and the resilience and know-how that’s been consequentially gained, will only serve brokers well.

“A hard market is a great training ground,” she says. “You understand how to underwrite a risk and sell a risk, and sell yourself as a broker.

“As brokers, we do ofer a great service – it’s not about entering numbers into a system and spitting out the price at the end of it – there’s far more to it than that.”

And it’s during a hard market when that becomes truly evident.

TIPS FOR BUILDING RESILIENCE IN A HARD MARKET

Barbara Cliford of The Hinwood Institute ofers these fve tips for building resilience during a challenging time at work.

1. Support innovation and change

If you can shift your focus from panic or anxiety to one of excitement to the challenge, the brain will then seek out evidence for why this is true. When you can build a bridge from problem to prize, you become resilient and valued.

2. Focus on what’s in your control and do that well

Lamenting over things from the past exacerbates depression, worrying about an unpredictable future creates anxiety. A mindful approach to what is happening now will create a greater foundation for resilience and progressive improvement.

3. Look for the opportunity in crisis

There’s wisdom in the saying ‘when life gives you lemons’. Those that transform disadvantage into opportunity are the most resilient. It is the man who sells shovels in the goldrush who is more likely to make his fortune.

4. Get comfortable with asking for help

The biggest mistake people make is not allowing themselves to ask for help. Those that have a support network and are better at asking for help are more resilient than others. The key is in knowing what your breaking point is, and when you have reached it.

5. Stay connected and in touch

Research has shown that those who stay connected in the community are more resilient and have a greater life expectancy. Professionally, it’s about staying connected to your community, network and industry.