How brokers can help their customers make the most of a post-pandemic insurance landscape

Are we nearly there yet? With a ‘new normal’ world tantalisingly close, we cast an eye over some of the challenges and opportunities that lie ahead for brokers

Life will never be the same after Covid – and that goes for the insurance industry, too. By the time the crisis is over, it is likely to have cost the UK insurance sector around £6.2bn in claims. The pandemic has given us a whole new attitude to risk – which has changed the landscape for both brokers and the customers they look after.

“The Covid-19 pandemic highlighted the need for resilience and showed how those that could least afford a financial shock were worst affected,” said BIBA chair Jonathan Evans in the association’s recently published Manifesto Resilience. “Improving access to insurance can improve resilience,” he concluded.

So how can the sector move on from here – and, crucially, how can brokers help their customers make the most of a post-pandemic insurance landscape?

“According to a recent BIBA report, Covid has led around two-thirds of organisations to change their business models – but only around 10 per cent have altered their cover accordingly,” says Close Brothers Premium Finance sales manager Iain Atkinson.

“Brokers specialise in understanding the policy differences afforded by different insurers. Given the BIBA findings, it has never been more important for business clients to engage with a broker for their insurance needs.”

The unprecedented events of the past 18 months and their impact on the insurance sector have prompted BIBA to call for the existing Pool Re government/industry scheme guaranteeing cover for losses resulting from terrorist acts to be extended to underpin losses arising from pandemics. 

At the same time, it’s urging the industry not to panic – for instance, pre-pandemic there were 32 insurable diseases, and BIBA is recommending that these remain. Insurers should consider risks on their own merit, rather than exclude diseases en masse.

Away from the disease itself, the country’s economic recovery will bring both opportunities and challenges for the insurance sector. 

“We’re starting to see risks move around between our broker partners now – and that suggest a real appetite for growth within the sector,” says Atkinson. “Given the reductions in capacity and soaring premiums for some classes of insurance, renewal conversations are being held earlier than ever. Honesty about the state of the market and managing expectations around premiums are two key aspects of conducting business in the current climate.”

A principal post-Covid challenge will be that the pandemic – among other factors – has given birth to the first hard market in a generation. This will be new territory for many brokers and their clients alike, meaning that brokers will need to explain to customers why the uncertainty of the market (not to mention the virus itself) makes insurance harder to quantify and heralds rising premiums.

At the same time, brokers should also be alert to the new opportunities coming from the sweeping away of restrictions on 19 July, particularly in the hardest-hit sectors. 

“Some sectors have been hit harder than others in the pandemic, forcing more significant adaptations to their business model,” says Atkinson. “The market needs to respond so as to ensure businesses have the insurance flexibility they need. 

“Nor should we ignore the possibility that further government actions could lead to further impacts on business models. Businesses should be talking to their brokers now about keeping their levels of cover appropriate across all eventualities.”

Brokers can add real value to their services to customers in many ways, not least by using their expertise and market knowledge to best match insurance cover to the fast evolving needs of their clients. 

“Brokers may also find that they need to be empathetic to their clients’ potential struggles to pay or stick rigidly to a contract right now,” says Atkinson. “At Close, we’ve tried to support our brokers and their clients in those repayment conversations throughout the pandemic – and we’ll continue to do so. 

“For all of us, honesty, good communication and thinking ahead are the keys to good outcomes as we move forward.”