Briefing: Covid, capacity and poor insurer service continues to pose problems for brokers

By Editor Katie Scott

Although the Covid-19 vaccination programme has provided a light at the end of the tunnel for many businesses and individuals struggling amid the pandemic, brokers are still concerned about the continuing impact of the virus on their companies.

According to Insurance Times’s recent report in association with Close Brothers Premium Finance - Premium Finance Report 2021 – 74% of the 311 brokers surveyed by Insurance Times identified the continued impact of Covid-19 as the biggest challenge for the broking profession today.

Other major challenges defined by brokers include the hardening market (63%) and underwriting capacity (59%) – a concern that has continued since the findings in last year’s Five Star Rating Report: MGA Market 2020/21.

In addition, just under half of the brokers polled (47%) also labelled poor service from the insurance industry as a major challenge. This corresponds with feedback I received from brokers at the end of 2020 when compiling our December issue cover story – at this time, brokers based in the north of England revealed they were unimpressed with insurers’ service.

A third of brokers (33%) said that regulatory and compliance changes posed a huge challenge – I expect the FCA’s general insurance pricing review and the FSCS levy could be to blame here.

While 25% of brokers clarified Brexit as a challenge for the sector, a further 24% said the reputation of the insurance industry as a whole will pose problems for brokers.

It seems the fallout from the FCA’s test case on business interruption policies is still having reputational ramifications following the Supreme Court’s January judgment, not least regarding the professional indemnity claims exposure many brokers are tentatively facing as policyholders seek to recoup their lockdown-related losses.

This is further supported by the FCA’s Financial Lives survey, which flagged how the pandemic has caused customers to lose trust in insurance businesses.

Source: Premium Finance Report 2021, Insurance Times/Close Brothers Premium Finance, published March 2021

Whatever way you look at it, brokers have got an uphill battle ahead of them if they want to flourish amid these challenge landmines. Frustratingly, some of the challenges pinpointed by brokers are tricky to be proactive around – I think we’ve all given up trying to predict what direction the pandemic will travel in next, for example.

It is interesting, however, that brokers are still struggling to get a decent service from insurers – especially considering I initially wrote on the subject last December and yet here we are in April.

Maybe some insurers are viewing June’s ‘end of lockdown’ deadline as a reason to maintain the status quo before a form of normality can resume, but if the current business-as-usual isn’t delivering, then surely change needs to be implemented, even if it will need reviewing again in a matter of weeks?

Jaime Swindle, managing director of networks and products at Bravo Group, described brokers as “resilient beasts” when we spoke earlier this week – although brokers’ resilience is to be applauded, one would hope that this is supported by a good quality service from insurers, rather than these businesses being earmarked as a “major challenge” for brokers to contend with.