FullCircl and BIBA open the discussion on the biggest broker challenges of 2023
The BIBA manifesto for 2023 is “Managing Risk – Delivering Stability”. And that’s exactly what we did on 26th January 2023, when we brought together over 60 handpicked senior leaders and influencers to dive deep into two of the biggest challenges impacting brokers in 2023 - namely the hard market and underinsurance.
Now is the time to have the underinsurance discussion
Steve White, CEO of BIBA, led the discussion on underinsurance.
With inflation, the rising cost-of-living and cash flow difficulties, the war in Ukraine, energy prices, and high labour and materials costs, we’re currently in the eye of the perfect storm for significant underinsurance.
Aviva’s Risk Insights Report 2023 highlighted that two-thirds of UK business leaders (63%) are ‘worried’ about the impact of the cost-of-living crisis on their business, while 29% believe it will have a ‘serious’ impact on their business. It also pinpointed some startling figures about the impact, with a fifth of businesses (21%) having reduced or considered reducing their insurance cover in the last year. Half of UK business are now actually considered to be underinsured to some degree, and 40% of policies with buildings cover have at least one premises suspected to be underinsured.
These figures are backed up by CILA, whose recent research found that underinsurance is found in 40-50% of claims. Underinsurance in the commercial sector is also wide ranging, with Premium Credit Ltd reporting that 21% of businesses have stopped buying employer’s liability cover, 22% have cut back on professional indemnity, 21% on public liability, and 19% on business interruption insurance.
So, how can brokers rise to the challenge of tackling underinsurance?
The worst scenario for business owners is to get their first experience of underinsurance when they make a claim. The key to tackling underinsurance is to move from a reactive approach, to a proactive or ideally predictive one. Guests at the event were all in agreement that utilisation of data is the fastest and most accurate way to identify customers who are at risk of being underinsured.
Failure to tackle this issue will not only damage the viability of businesses, particularly SME’s, but also impact the future success of brokers themselves - let’s be honest, they aren’t having an easy time of it either.
Our event survey found that 24% of insurance leaders agree or strongly agree they are finding it harder to win new business, whilst 59% are finding it harder to retain existing clients.
The event certainly kickstarted an urgent discussion, one that is perhaps long overdue.
What about the hard market? Has it plateaued?
David Sparkes, Head of Compliance and Training at BIBA took over talk about the current hard market conditions facing brokers. He promised lots of facts and figures, and he didn’t disappoint.
According to Marsh’s Global Insurance Market Index, for the third quarter 2022 property insurance pricing increased 6% year on year, and casualty pricing increased 4%. Rates remained competitive for EL and PL. Financial and professional lines pricing have flattened out, and cyber pricing increased 66% year-on-year in Q3, down from 102% in Q2.
So, the evidence might suggest that the hard market is plateauing. But David urged that we should not be too hasty to jump to this conclusion.
The December 2022 Reinsurance renewal programme highlighted that the 5-year moving average for 2022 was the second largest on record, thanks to a rise in perils and macro trends including inflation, high interest rates, heightened investment risks, climate and ESG, shareholder pressure and underinsurance.
David’s assertion that we shouldn’t speak to soon when it comes to the continued impact of the hard market was reinforced by the insurance leaders attending the event. 34% agreed that the hard market is having the biggest impact on their future plans, whilst 36% also said it is the biggest challenge to their growth aspirations.
Despite the challenges brokers can be confident of a brighter outlook for 2023
Not because these issues are going to disappear, but because brokers are ready to tackle them head on.
82% of respondents to our survey agreed or strongly agreed they are putting in place steps to combat such challenges, along with others including regulation, Brexit, the talent shortage, and the ongoing fallout from the global pandemic.
The discussion doesn’t end here
At FullCircl we love to listen, and we love to chat. Join the discussion or find out how we can help you harness data to tackle the biggest challenges impacting your organisation this year.
Or why not join us at the BIBA Conference
FullCircl is proud to continue supporting the BIBA Annual Conference as an exhibitor.
We look forward to welcoming you to stand G10 where we can discuss the challenges you’re facing. Come and see us, meet our team, and tell us about your challenges so we can rise to them together.
Spoiler alert 🚨…
We will also be showcasing our new FullCircl X Acturis integration, a new connected solution for brokers, insurers, and MGAs that promises to deliver meaningful opportunities to drive growth through rich, contextualised, and connected company intelligence.