Brokers need to reposition themselves as advisers and consultants.
That's the view of John Nicholson, head of Marsh's corporate client practice. Nicholson said: “This is how brokers will increase their value to clients: they will develop their understanding not only of hazard risks but of strategic and operating risks as well and will seek to provide clients with a more comprehensive understanding and analysis of the issues they face in their business. In doing so, they will begin to compete more actively with the audit firms and with the management consulting firms in providing risk advice.
“They will devote greater resources to advising clients on risk mitigation and risk retention strategies. The brokers that most successfully evolve in this direction will also be more successful at differentiating the risk characteristics of their large commercial clients when presenting their clients' risks to the insurance markets.”
Nicholson said that this trend is in response to companies taking a more sophisticated approach to risk management: “As companies improve their understanding of risks and differentiate between those risks which are predictable and can be managed and those which are unexpected or catastrophic and should be transferred, so they will reduce their total cost of risk.”
