A Path to Growth

Leading demographer Bernard Salt, futurist Gihan Perera and Allianz Global Corporate & Specialty’s James Stack say the broking industry has a unique opportunity to position itself to forge new paths, ways of working and enhance its role with clients as a true partner in risk. Michelle Dunner reports.

The 2021 Allianz Risk Barometer1 was dominated by the global pandemic with issues around business interruption, the outbreak and cyber incidents keeping company leaders up at night – dubbed the ‘COVID-trio’.

While Australia’s economic recovery from a year like no other seems to be more rapid than many other countries, there are clear winners and losers in the business arena. But the implications for brokers in looking to attract future

1 https://www.agcs.allianz.com/news-and-insights/reports/allianz-risk-barometer.html generations of clients are more nuanced than merely targeting areas of business that are expanding and reducing exposure to those contracting.

“While we’ve identified the COVID-trio as being uppermost in the minds of most business leaders, the gamut of risk remains,” says James Stack, Pacific Distribution Director for AGCS.

Stack says the central conversation brokers must have to deliver value to their clients today and into the future needs to transcend individual risks and focus on business continuity.

“If COVID and the other major issues we saw last year, including bushfires and floods have taught us anything it’s the need for a working, living business continuity plan (BCP). There’s been a lot of talk about business disruption, supply chain issues, ‘near-shoring’, but it always comes back to having a robust BCP and that’s where brokers really can help their clients.

“If the focus for brokers is to attract new generations of clients, it’s more than looking at individual industries. The broker today, tomorrow and into the future has to go beyond advising on risk transfer and help businesses with their ability to recover. Insurance, while a critical component, is just one aspect of that.”

EXPANSION AND CONTRACTION

At the 2020 NIBA conference, Bernard Salt identified healthcare, technology, logistics, high-end manufacturing and agribusiness as having the highest growth potential.

The broking industry has a unique opportunity to position itself to forge new paths, ways of working and enhance its role with clients as a true partner in risk.

“While those five industries still hold true, if I was giving my conference address today, I’d be leading with home furnishings and home technology businesses,” he says.

Salt says this is driven by ‘VESPAs’. “The acronym stands for ‘virus escapees seeking provincial Australia’. It’s a movement of people scootering out of Melbourne and Sydney looking for escape to a sea change or a tree change. We saw that 20 years ago led by downshifting retirees but VESPA takes that theme and injects youth and energy into it. People relocate because they can now take their jobs with them, particularly into what I call the ‘Goldilocks zone’ within 120km of the CBDs.

“These are people who may need to get to the city once a week but are now focused on lifestyle. There are also people moving who are taking their businesses with them, to meet the demand for local services. For me, insurance agents should see a lot of opportunity unlocked with this movement; it’s about running with the current, reading the trends and looking to capitalise. If you’re waiting for everything to return to normal it may well be a death knell.”

If brokers have traditionally focused on businesses impacted by industry contraction, Salt advises them to “look laterally” to reap the advantages of the demographic shift exemplified by VESPAs. “Rather than, say, a hospitality business, which may or may not come back, look at the suppliers of appliances, furniture, technology contractors, tradies involved in building improvements.

“But even with hospitality clients, there is a potential role for brokers in helping them rethink their business.”

Brokers can use the PESTLE analysis, which is a framework used to monitor the macro-environmental factors that may have a profound impact on an organisation’s performance, to help them accelerate the “rethinking” process. Futurist Gihan Perera says it’s an optimal tool looking at political, economic, social, technological, legal and environmental factors.

“Brokers should first take a step back,” Perera believes. “If they used PESTLE to look at their own businesses, to see what’s happening in the insurance industry, the political

KEY CONSIDERATIONS FOR BROKERS

• Have conversations with your clients that transcend individual risks and focus on business continuity.

• Acknowledge that insurance is just one component of enhancing the ability of a business to recover.

• Recognise that your client may no longer be local – you can pick up new business without having to shift yourself.

• Build a social media presence and engage your target audience online. If you don’t have the skills to do so yourself, subcontract someone to deliver engaging messages to potential clients.

• Be aware that in the future you may not be competing with another broker to attract clients. Be prepared that apps, online software and other disruptors may impact your client base.

and economic changes, the new technologies available, they can then have a greater awareness of how to do that for their clients. Ultimately, all brokers can choose whether they want to be a service provider or go further and help their clients understand about more than insurance products, but about risk, uncertainty and the future.”

Perera says to attract future generations of clients, or indeed continue to deliver value for existing clients, “Brokers need to be closer to clients and customers and understand their priorities have changed. Technology means even if you’re a small broker it doesn’t mean you can’t compete with the big guys. It’s all about going beyond the transactional; most businesses don’t think about risk in the same way as brokers and you need to understand their environment. Run an online webinar, a client loyalty event, educate your clients, build the relationships by bringing your clients together so they can network with each other.

“People have problems they want solved and help with goals they aspire to.” Perera suggests brokers carefully consider what’s in their wheelhouse that can help their clients solve problems and reach goals. He says, those brokers that do, can feel confident about their future.