Briefing: Brokers are looking for silver linings in economic storm clouds

By Jon Guy

Brokers have been on the front foot in the past two weeks, seemingly adopting a glass half full approach to the current economic and risk climate.

End clients are still feeling the economic pain of rising inflation and the cost of living crisis, which saw SME optimism for the future fall to a level not seen since the very midst of the Covid-19 crisis.

However, brokers see their roles and the opportunities for the insurance industry increasing.

David Howden, chief executive of Howden Group, released the company’s 2022 year-end financial results on 30 January 2023 with a rallying call for the broking sector.

He said: “As climate, macroeconomic and geopolitical uncertainty continues, the insurance sector has a tremendous opportunity to demonstrate its value to society.

“At times like this, it’s important that we challenge ourselves to find new ways of helping our clients confront a dynamic and interrelated risk environment - such as our product insuring the authenticity of carbon credits and our work on using insurance to fund disaster relief projects.”

Encouraging resilience

On 24 January 2023, broking trade association Biba launched its 2023 manifesto – the body’s chief executive, Steve White, warned that brokers were sharing their clients’ financial pain.

“Insurance brokers are experiencing significant financial pressures in a similar way to many businesses across the UK, including much higher energy costs along with high levels of small business rates or corporation tax,” he warned.

In addition, “the cost of regulation for insurance brokers is at an all-time high”, White added.

However, speaking at Biba’s manifesto launch event at the Houses of Parliament this month (January 2023), economic secretary to the Treasury Andrew Griffiths noted that brokers were key to the resilient future of UK business.

“Managing risk is something we all do every day,” he said. “It helps us to be resilient and brings stability to our lives, enabling us to flourish. Insurance has a long history of providing financial resilience.

“As society changes, so does the nature of risk and the protection needed. BIba members are at the forefront of finding insurance to meet these evolving needs.”

‘Where there is challenge, there is opportunity’ has long been a mantra for the insurance sector.

When times are tough, the need for additional security increases and brokers are the first port of call for many businesses as they seek to navigate what is still a dynamic and challenging risk market.

Brokers are finding these conditions hard too, but a glass half full approach may well pay dividends.

However, brokers will need to keep their nerves in the face of more economic woes in the months to come – economists believe that if there is light, it will come at the end of a very long tunnel.