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Innovation essential to salvage London market’s reputation

The article below, by Max Carter, CEO of New Dawn Risk, was originally published in Insurance Day in March 2021.

Underwriters and brokers alike must be more responsive and innovative when it comes to addressing client needs to repair London’s reputation with regional and international clients.

Over the last year, the COVID pandemic has changed almost every part of the global economy, and insurance is no exception. Working online, with data held in the cloud, has proved robust and practical.  Like other industries we have experienced a revolution in working practices, creating a new normal.

The signs now are that many firms will soon begin adopting a hybrid office/home model that should end up being just as effective and more efficient, adding back in that missing element of human interaction.

Beyond the purely practical, though, there are other areas where the past year has not gone as smoothly as we may at first have imagined. In some cases, we have, I believe, made the mistake of thinking that continuing to function in any way at all was a success, and we have failed to acknowledge that our clients require more than just the basics. In my view there has been resulting collateral damage done, and it will require effort on our parts to help our economic bounce-back.

Service standards

Firstly, it seems that to many the London market has appeared expensive and gained an unwelcome word-of-mouth reputation for delivering poor service to regional and international buyers over the past twelve months.  Lloyd’s Decile 10 remediation was already well underway when COVID hit and, as a consequence, London pricing was out of kilter with the wider market.  It was a tricky time for clients to be suddenly unable to talk to their brokers/insurers face-to-face; and some important conversations were undoubtedly mishandled or avoided, simply because it is easier to ignore the hard yards when you are not physically present within a market.

Perhaps it would be more charitable to consider some teams were simply swamped and were finding everything was taking longer to work through (I wonder if this is subtle support for the old argument that face-to-face broking is more efficient for the underwriters, if not for the brokers).  Response times to brokers certainly suffered through the second half of 2020.

To my mind, the consequences of this could ultimately be serious, because this sort of criticism soon ripples around the world.  We cannot take our pre-eminence for granted.  Clients who have been loyal to London for many decades now have alternative options available to them and could head for the exits if they continue to be faced with an expensive market that is hard to communicate with.  We have an opportunity now to step up and demonstrate that our reticence over the last year was a covid-related blip, not a permanent step down or backwards, and we must take it.

What are the remedies for all this reputational damage? First (and urgently) both underwriters and brokers in the London market need to focus on being more responsive. It is bad enough having to give out bad news, but if the news comes late, the person giving the news is reluctant to engage, and overall service is also poor, we must ask ourselves why anyone would bother to come back to London next time, particularly as the market starts easing again.

Innovation

Innovation is also important to help create a step change in per­ception. All of us in the market need to work to rebuild our lost reputation by creating new and innovative products that seek to cover the business interruption risks caused by future epidemics (including Covid).

Organisations like the London Market Group (LMG) have a role to play too. We are in great need of a strong promotional campaign that reaches far into the international markets that feed into London and I applaud the LMG for its work in this field. Its «London makes it pos­sible» campaign must now, more than ever, be our mantra around the globe: not just a slogan, but an approach to live and work by for our international market.

Underwriters also need more help in delivering upon this en­deavour. Busy teams are cut too thin at present; this makes it hard to come up with smart, bespoke solutions. Insurers perhaps need to consider how to deliver digital underwriting better by staffing up on the underwriting support side. Moving to a more radical option, would it be so wrong for insurers to start publicly agreeing service standards for underwriting en­gagement and setting out to ad­here to them?

Finally, insurers and brokers need to recover their teamwork, rather than trying to eat each other’s lunch. Let us stop quib­bling about commission, espe­cially in a hard market, and look outwards to our clients. We all re­alise the market needs to squeeze costs out of distribution, but let us not do this until we have worked through these more pressing is­sues together.

We must work as one to rebuild London’s reputation as a great in­surance centre as the pandemic comes to an end.