Harnessing the insurer-broker relationship to navigate hard market challenges

The current hard insurance market in the Middle East presents a paradoxical scenario where multiple factors such as the exit of global brands, cybercrime, climate change, geopolitical uncertainties, inflation, reduced capacity and the increased cost of reinsurance have all created an environment of higher premiums. These forces are making it much harder to assess risk, which in turn is leading to a tightening of terms, more stringent underwriting criteria and reduced coverage. 

But it doesn’t end there. Today’s intricate risk environment is also causing a decline in some insurers’ ability to accept new clients throughout the region, resulting in some opting to exit specific market segments. This presents a rare confluence of increased demand and diminished supply of insurance coverage – often bringing premium levels up in some products.

Working closely with brokers

However, even in the face of an unfavorable and untenable emerging market trend that needs to be promptly addressed, there is good news – and opportunities. By working closely with our broker communities, we can collaborate to manage and mitigate the wide range of growing risks and jointly minimize the proliferation of both established and emerging risks by designing effective solutions that cater to the specific industry and customer needs in the Middle East region.

As insurers, we have an opportunity and a responsibility to protect our assets – and we can do that by helping brokers to inform and manage their clients. The closer we get to brokers, the more we can help them gain a more granular understanding of risk so that they can provide the appropriate solutions for their customers. Working together, brokers and insurers can provide clients with the right level of protection and service, ensuring that their expectations are met in the most effective and efficient way possible. By collaborating, we can design products that meet the unique needs of each client, provide risk management advice to help mitigate losses, and set premiums at the right level to avoid over or underinsurance. These relationships also help bring innovation to the insurance industry – one such example of this parametric insurance.

The parametric example

At GIG Gulf, we are using data analytics to innovate parametric commercial insurance solutions that can help the broker. By leveraging data, a parametric solution makes it possible to create a highly precise and bespoke insurance product that covers the probability of a predefined event. The likelihood of that event happening is measured by an index or set of parameters that reflect the client’s business continuity plans or risk tolerance. If those parameters are met or exceeded, the insurer will pay out. 

Our job as experts is to harness the strength of our broker relationships to help them understand how the parametric approach works and how to articulate its benefits to their clients. Brokers also need to understand our own risk appetite as insurers and how the composition of our products can be adapted to their client’s needs. Closer dialogue and mutual understanding are essential if both parties are to avoid over or underinsurance and add value to the client relationship. 

Finding common ground

Another area of joint collaboration between brokers and insurers is in bringing additional value to the clients through the usage of common technologies. Digital solutions developed jointly between insurers and brokers can help them to better serve their customers and make the whole insurance experience easier, faster and more enjoyable. 

There are other creative ways to enhance collaboration between brokers and insurers so that together we can take advantage of the benefits of the hard market – and the challenges it has created. To navigate multi-market broker relationships, the GIG Gulf regional broker and partner roadshows are currently taking place across the different markets in which it operates. This is proving to add enormous value as we celebrate our ever-closer relationships with our brokers and enhance the way that we communicate with them right across the region – helping us to meet market-specific trends and needs. 

What this ultimately shows is that there is scope for greater harmony and mutually beneficial collaboration between two parties who both share the same goals: to collectively create the very best customer experiences and leverage growth opportunities in order to better navigate through the current hard market challenges. 

Mr Ricardo Arroyo, Chief P&C commercial lines officer at GIG Gulf.

Copyright: This article was featured in Middle East Insurance Review, March 2023.