Insurance brokers cut out the cyber and D&O middle man

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Insurance brokers cut out the cyber and D&O middle man


Insurance brokers cut out the cyber and D&O middleman | Insurance business America

But do they do so at their own risk?

Occupational risks

By Jen Frost

A weak professional liability and cyber environment is driving retail insurance brokers toward direct insurers and away from wholesale brokers when acquiring new applications and customers.

But given the wealth of cover available, a professional insurance services specialist warns that brokers who take the “easy route” may end up in their clients’ bad books later on.

“Our retail brokers are very good and transparent, and we maintain many of our contract renewals,” Anthony Manna (pictured), SVP of Jencap’s specialty insurance division, told IBA. “But on the other hand, when a retail broker is looking to make a new filing … or service a new client, the fact that the market is softer is driving them to leverage their direct market and their own access.” [before] They come to us.”

In the current environment, retail insurance brokers may be at risk of thinking that getting a quote means their customers’ insurance needs will be met, Manna said. They may not return to a wholesaler until a problem is reported or they are faced with competition.

“They’re working on millions of dollars in premiums to properly insure the customer, but the D&O coverage might only be $50,000, so they don’t think twice about it,” Manna said. “They get it…present it and don’t even say, ‘There’s an antitrust exclusion here or they don’t have an additional Side A or they don’t have that’ – they don’t check it.” [to the extent they] should be.”

While D&O has seen a slowdown and a surge in capacity, cyber liability has stood out.

“For any given risk, you could target 30 markets and get 20 offers,” Manna said of the current state of affairs. “That doesn’t mean they all have the right coverage, that doesn’t mean they’re all competitive, but two to three years ago you could travel to 30 markets with a lot of risk and get a call, or that was the case for me ask someone for a quote – it’s definitely a different market.”

Fierce competition in the cyber and professional liability sectors may be waning

The culprit behind falling interest rates? The now highly competitive cyber and professional liability insurance markets have seen an influx of new capacity.

“Everyone wants to get a piece of the insurance pie,” Manna said, highlighting private equity (PE) investments and moves by existing players. “They are bringing in new MGAs, which means more capacity is being written and more branches are looking to do deals.”

But some new entrants and insurers who have whetted their appetites could be in for a rude awakening as claims pour in.

“As they [new entrants] If you start seeing damage activity, it will at least push them out of the area [see them] reduce their capacity,” Manna predicted.

Manna, the IBA’s leading specialist wholesale broker, predicted the easing “over-correction” will ease over the next six to 12 months as claims catch up and put modest upward pressure on rates. However, routes are unlikely to return to the level of hardening seen in 2020, he said.

“We’re just becoming a valuable asset to our retailers in every way possible,” Manna said. “Market access is an advantage, even in a weak market – but the ability to understand the different coverages, understand the forms, help our broker and their clients understand what they are buying, what is covered, and what is not. “

Efforts could include attending retail broker presentations, providing policy comparisons and claims examples, and getting the customer the “best” rather than the cheapest deal.

“We will get a handful of offers, we will monitor the market, we will push them to strengthen the coverage or revise it if necessary,” Manna, who has worked at Jencap since the 2016 acquisition of NIF, said. “Retail brokers can rely on us.”

Do you have an opinion about professional services and cyber softening? Leave a comment below.

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2024-04-19 14:25:41

www.insurancebusinessmag.com