Louis Kahts, CIB – Head of Underwriting shared some thoughts with us on the increasing value that brokers are adding in an uncertain world
COVER: Has the role of the broker changed and, if so, what changed?
Louis: The role of the broker is continuously evolving and being much more involved in risk management is part of this evolution. With reducing rates, less reinsurance capacity and more complicated treaty structures, insurers must ensure their profitability remains on track and one of the few tools at their disposal is risk management. This is however no longer a one-way street where an insurer will impose conditions and the broker / client just accepts it. To enhance business retention, it is imperative to have the buy-in from both the broker and the client and for many insurers the only way to get buy-in from the client is via their broker. Brokers are therefore an integral part of successful risk management.
COVER: What does it entail when we say the broker also plays a role as Risk Manager?
Louis: The intention of risk management in the short-term industry includes risk identification, risk mitigation as well as post loss recovery. Brokers know their clients much better than insurers and is therefore in the excellent position to assist and advise both the client and the insurer. It is a simple process to survey a risk and send out risk requirements but by having the support and assistance from the broker these requirements can be discussed, explained and implemented to achieve positive results for both the client and the insurer. The broker is much better placed and informed to understand any capital restraints their clients may or may not have.
COVER: Are clients open to this increased involvement?
Louis: Our experience has shown us that clients are not only open to the increased involvement, they are starting to insist on it. Clients feel more familiar with their brokers and will more easily discuss difficult requirements with a familiar face and voice. Brokers now also have another element to enable them to make more regular contact with their clients and by doing this they inevitably forge stronger relationships.
COVER: How does a broker and their staff prepare for this role?
Louis: The risk management process should not be the sole responsibility of the broker, however insurers should normally have more experience in applying risk management simply due to their broader involvement in the market and by dealing with multiple brokers. Insurers need to assist brokers and over time provide training in what is required from a risk management point of view. Risk management is a constant process and has numerous benefits if implemented continuously and timeously. With the support from the insurer’s risk management division, the broker can over time equip themselves and their staff with the necessary skills to consistently improve risks.
COVER: How does CIB, as an insurance partner, see this changing role of the broker?
Louis: CIB embraces risk management completely. We see it as a crucial part of our business and something that we cannot do without. Our approach has always been to include our brokers completely in all discussions around risk management. Our brokers will combine covers best suited to their clients and we will then offer our internal and / or external risk management partners to assist the client and broker to ensure the risk meets all requirements. One of the invaluable elements of risk management is that it creates seamless claims which is a fantastic benefit for insurer, broker and client.
CIB also embraces the fact that risk management is done through and with our brokers. We do not understand their clients as they do and will continuously approach the subject of risk management in conjunction with our brokers. In our opinion it is not only necessary but a requirement of our business.
COVER: How do you assist brokers in taking advantage of this opportunity?
Louis: CIB encourages our brokers to work with us when it comes to managing a client’s risk. As mentioned above, we see this as a business requirement. There are only benefits in having a combined approach towards risk management. Most of our success in our risk management process is attributable to the fact that it is a discussion between all parties. We constantly request our brokers to discuss requirements with us and to assist us in how we can accommodate clients while obtaining the best results post surveying.
As mentioned above, not only does this create excellent results for us from an underwriting perspective but it also assists the broker to really get to know their clients and the risks that we insure.
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