The ‘single biggest challenge’ for brokers is capacity says Miller boss

The “single biggest challenge” for brokers is finding “capacity at an acceptable price for clients”, said Greg Collins, chief executive at specialist broker Miller.

Speaking exclusively to Insurance Times, Collins said that sourcing capacity is “proving more difficult” nowadays, compared to soft market days gone by.

He explained: “The single biggest challenge is a capacity challenge, so we’ve got to make sure that we’re able to find the capacity at an acceptable price for our clients and that’s proving more difficult than it has been in the past.

“We’re coming out of an historically soft marketplace where there’s been an abundance of capacity.

“Now, we’re having to work much harder for our clients to make sure we get them the deals done that they need.”

Linked to this, Collins added: “We’re in a rapidly hardening or [are] now in a hard marketplace, so we’ve seen significant contraction in capacity in certain lines of business, lots of correction - particularly from Lloyd’s in terms of business planning for 2021 - and a pretty strict set of guidelines on what growth might look like for 2021.

“That’s driven [a] pricing increase, but in any case, globally, losses over the last few years have been pretty severe and therefore there was always likely to be a pricing correction – that has been exacerbated by the Covid impact as well.”

Broker M&A

In terms of broker M&A activity, Collins believes this is not about consolidation as “competition is good in the marketplace”.

Instead, “what’s more important is that we can add complimentary services to our business to better serve our clients”, he said.

“There will always be businesses that reach a stage in their existence where they’re attracted by the ability to either join a bigger platform or a larger speciality platform, whatever it happens to be,” Collins continued.

“M&A will continue to be part and parcel of the London Market life, both on the broker side and on the carrier side.”

Covid-19 impact

From Collins’s perspective, the insurance industry has been “very, very fortunate” throughout the ongoing Covid-19 pandemic and although Miller has been impacted by the government restrictions imposed on events and gatherings in terms of its sports and entertainment business, Collins said there is “light at the end of the tunnel”.

He continued: “We have a significant sports and entertainment business, so that was definitely impacted by the effects of the handbrake going [up] on any outdoor live events taking place or mass gatherings.

”So, that definitely had an impact, but outside of that, our business has continued to grow and we’ve been very lucky really.

“As an industry, we’re very, very fortunate that we’ve been able to weather the storm pretty successfully.

”We’ve not had to furlough a single employee, everybody’s been very actively engaged with the business and obviously if this latest announcement about this vaccine proves in any way accurate, then we might well see the light at the end of the tunnel.

“We’ve been very fortunate; I think we’re very, very lucky from that perspective.”

Commenting on the fact that face-to-face networking has been difficult – and at times non-existent thanks to government rules – during the pandemic, Collins noted however that “brokers and underwriters have managed to conduct business very effectively through all of this”.

But getting back to meeting in-person is important, especially for brokers just starting out in their careers, Collins added.

“For the longer term, face-to-face remains a really key ingredient to the secret of the London Market and I think [it is] particularly important for networking and [the] development for younger people joining in the marketplace, that they have the ability to be able to build those networks that we’ve all been able to build over a period of time,” he said.

Blueprint Two

Collins added that Lloyd’s of London’s Blueprint Two, however, is “quite exciting for the marketplace generally” and focuses “in the right areas”.

This, in turn, “should bring both accelerated services, the ability to deliver more quickly to our clients and provide efficiency to the transactions between brokers and underwriters”.

“That’s a really good thing,” Collins said. “One of the things that’s come out of the pandemic has been this acceleration of electronic trading in the London marketplace, which I think would not have happened at the pace it has were it not for Covid.”

Lloyd’s of London’s focus on electronic trading correlates closely with Miller’s own recent technology investments, Collins revealed.

He explained: “A lot of our focus is on driving efficiency through processes between ourselves and the market and also between ourselves and the clients and being able to trade electronically obviously allows brokers to get on and do the production and broking of the business, without having to spend huge amounts of time in the processing activity.”