Broker balancing act: Client and insurer relationships

Narrator: Welcome to IB Talk, the leading podcast for the insurance industry across Australia, New Zealand and throughout the Asia Pacific region. Brought to you by insurance business. 

Daniel: Hello and welcome back to IB Talk. I’m Danny Wood, news editor of Insurance Business Australia. Vishal Kapoor is director of the insurance brokerage McLardy McShane Group, based at the head office in Melbourne. The brokerage has more than 20 branches across Australia. Vishal’s role covers team management, client support and insurer relationships. And as brokers face more complex risks, their relationships with insurers are probably more important than ever. We’ll talk to Vishal about how he negotiates with insurers and other broker related topics. Vishal Kapoor, welcome to IB Talk. 

Vishal: Oh, thank you, Danny. Thank you for having me. 

Daniel: Well, thanks for coming on. Let’s just pull the focus out to start with. What is a working day in your life look like usually, and what are your main challenges as you come into work? 

Vishal: My working day starts very early. Five days a week I wake up at 5 a.m. in the morning. I am physically sitting behind my desk at 630 with a cup of coffee in hand. 

Daniel: Wow. That’s exceptionally early, isn’t it? Is that is that something that you chose? I mean, do you enjoy being such an early morning person or is that just a product of having lots of responsibilities? 

Vishal: No, I think I chose that long time ago when I first started insurance. My first job insurance was difficult to get to, and then I started to get dropped off to work by my dad and it had to be before his work started. So ever since then, which is now spanning back 25 odd years ago, I’ve always been an early starter. 

Daniel: You mentioned your dad. Was he involved in the industry too, or you just happened to be on the same work route? 

Vishal: No, same work route. He was an accountant by trade. 

Daniel: Okay. I have to mention it. When I was doing a bit of research on you, I noticed your LinkedIn profile has a background picture of electricity lines and wind turbines. What motivated that picture choice? 

Vishal: Oh, well picked up. I chose that picture because it depicts power, albeit electricity power. And my catchphrase in the profile is the power to help you succeed. So it’s a bit of a play on words, but it goes with my ideals where, you know, you have the power to succeed in whatever you do in life. So it is a bit of a play on words. 

Daniel: Hmm. And let’s talk about you a little before we get into the broker issues. How did you get your start in the insurance industry? 

Vishal: Well, believe it or not, Danny, I chose the industry. So one of those who did not fall into the industry. So any attend, which is going back to 1991 now, I opened the newspaper to see what jobs were available and what advertised, and there were heaps of insurance jobs, mostly with GIO and AMP. As I mentioned earlier, my dad was an accountant, so I spoke to my dad to say, Look, I really want to do insurance in accounting. And he said to me, son, quote unquote, you can do whatever you like, however you have two degrees. And one of those has to be accounting. 

Daniel: Oh, interesting. So you did the accounting degree, but you worked in the insurance industry? 

Vishal: Yeah, I finished doing accounting and insurance degrees in Deakin University, Burwood, which was perfect because it was only ten kilometres away from my home where I was residing. So that worked out really, really well. 

Daniel: Did you get funny looks from your friends at school? Year ten is a sensitive time for the peer group and when you were sort of showing an obvious inclination towards insurance, did that make you a popular figure at the parties? 

Vishal: No, because insurance is one of those things that it was a junk. So it was really all you’re doing finance. Are you doing accounting as opposed to doing insurance? I didn’t get many looks my way from that perspective. But, you know, as I progressed in there, particularly when I joined a university, there’s only two undergraduates doing my course. 

Daniel: Wow, that’s interesting. So, I mean, that’s I guess the education issue is still a bit of a challenge for the industry. But so even back then, it was difficult attracting people to the industry and always has been, I guess. 

Vishal: Always has been. And that was and I’m going back to 1998 now. So, you know, two undergraduates doing a course which had about 50 students. So all the other 48 odd were postgraduates who are working in the insurance industry. And now we’re doing this course as a post grad. 

Daniel: Interesting. So in a sense, you were having to sort of, I guess, mix with people who were more experienced from right from the start. Did that help your career? In some ways. 

Vishal: It actually drove me more because I was one of the two students who sat in the classrooms not understanding what the. Lecturer was saying, and I’ve got to give kudos to that lecturer because he’s in the industry. Mr. Gary Gribben. He was one of my lecturers at Deakin University and I would be just recording the lectures because I didn’t understand what he was saying and then had to go back home and listened to those lectures again with the textbook in hand to understand more comprehensively what actually took place. 

Daniel: In a way, though, that underlines what makes the industry so interesting,  it’s there’s a lot more to it than I think most people really understand or even believe when you try and tell them over a drink or a coffee, that depth of knowledge that’s required. Did that help to motivate you to keep learning and stay interested? 

Vishal: Oh, look, absolutely. I knew when I finished my undergraduate studies, albeit there was a degree in insurance degree in general insurance. I knew back then that I could keep on studying and keep on making myself better and better. So I kept on with my studies and I went on to do my fellowship. Soon after, the fellowship entailed having a degree in insurance, which I already had but also had two years worth of work experience, which I got from my first job, which was on St Kilda Road with a brokerage called Freeman McMurrick Insurance Brokers. I started in their claims department and I’d worked there for two years before I went for my fellowship graduation. So yeah, that was back in 2001. I was inducted as a fellow. 

Daniel: And now you’re a director of a major brokerage in Australia. Can we talk about, I guess, the main topic today, which is conversations with insurers and brokers, are often in a slightly difficult position because they obviously represent the customer, but they do have to have negotiations and relationships with insurers. What are your conversations with them focusing on at the moment? 

Vishal: It’s funny you say that. The word is conversations. I think the key word is conversations. I drive my staff nuts when they email insurers on complex and large matters. You know, I always encourage them to have a conversation face to face, but over the phone and try and get a mutual outcome. I think a lot of brokers feel that they have to beat up an insurer or win over an insurer, but it always has to come down to a win win outcome. And if it’s a win win outcome, then you can have your head high in the industry from an insurer perspective. And also you’ve got clientele, you know, who respect that as well, where they’re, you know, yes, you’re working on behalf of a client, but ultimately that client may or may not be with you in ten, 15 years time. But insurance companies will always be there and they will always remember, you know, that that person helped me out or we’ve got a mutual outcome or we’re very successful doing business together. 

Daniel: Getting that win win must be tricky at times, though, especially now with all these unaffordability issues and and other challenges. Is there a way you coach your your staff on what to do when you have a particularly difficult risk, I guess, to place? And the premium looks really high? I mean, what’s the next step in that conversation? 

Vishal: I think with my well rounded experience, given I was, you know, been working in insurance broking both nationally and internationally. I’ve worked for an insurance company. I’ve successfully launched insurance products. I’ve actually ran an underwriting agency in my past experience that just gives me that all round aspect and experience, which works for me when I’m talking to an insurer because I understand their side of the equation. But also I’m able to explain myself better and in more detail with clients where they they seem to think, well, you know, this person actually knows what he’s talking about and there’s some credibility behind what he’s saying. So, yeah, you’re right. In this tough market or hard market, as we call it in our industry, it is very tough. It’s tough when you’re trying to negotiate complex matters and complex property programs with different layers. But again, it comes back to having a conversation, having an open conversation in trying to get a win win outcome. Now, there are times that I do get frustrated myself with insurers, which they try and cut back on covers which clients absolutely need. For instance, you might have a client on the river and they need flood insurance and insurers are not prepared to give it as opposed to price it up through an actuarial methodology where they can still make money and give the cover. And whether it’s affordable cover or not affordable cover, well, that’s up to the client to determine that that’s not my job or the insurer’s job. But I always feel that the insurers should be able to give the coverage, you know, at a price. 

Daniel: What happens when you have a client who has a particularly tough risk? They’re living on a living on a river, as you mentioned, and they’ve got a business and it’s got flood coverage that’s just too expensive. Other options for those clients or what happens if it’s just too much for them to pay? 

Vishal: Yeah, so we’re trying to work with clients and trying to mitigate that exposure. And insurance in itself is a mitigation of exposure. So we look at ways on how we can lessen the ability for a loss to occur or a loss prevention technique. It could be that, you know, we have, you know, a lot of their assets out of harm’s way. So when the waters do come in, you know, they’re out of the way or they’re raised in some way or you’re not leaving stock on the floor and you’ve got the raise platforms or palettes. So there’s there’s definitely ways and means of doing it. We do utilize other resources like risk managers and risk mitigation experts to come in who consult with us and the clients and say, well, what other ways we can do it? Insurers themselves also play a part in that, because sometimes I drag the insurers out there and say, Right, what would you do if you were the client? Give us some options. You know, can we do it this way? Can we do it that way? Can we have a higher access option? Can we have, you know, a limitation of cover for flood but still give full coverage for fire as opposed to saying, no, we don’t want to help the client, you know, carte blanche. 

Daniel: As you’ve mentioned, having a good relationship with the insurer allows you to, I guess, lean on them a bit more when you’re looking for other options. Is that right? I can’t imagine a broker starting out being able to say to an insurer, hey, come over and we’ll meet the client and you can we can work something out. That’s very relationship dependent, isn’t it? I guess. 

Vishal: That’s very relationship dependent. And that relationship, you know, spans over a number of years, spending times, having coffees with them, lunches with them, going out and see clients with them, mutually working on new business opportunities mutually, and partnering with them on an exclusivity basis. But more so, it’s about those conversations which we talked about earlier. And these relationships are not built over emails and electronic platforms. 

Daniel: Hmm. What do you see as the main industry challenges right now? 

Vishal: Oh, look, I think we alluded to this earlier, the lack of news coming through. This has always been the case, and I don’t see this improving in the foreseeable future. I mean, we are a people business, you know, And basically we need young talent coming through, which, you know, has always been the Achilles heel for our industry. 

Daniel: And what about the other one, I guess the ones that you see touted in global risk reports from big insurers, cost of living, climate risks. I mean, are those on your mind when you’re kind of finding coverages for clients? 

Vishal: Oh, look at those areas of limitations. And sometimes I look at counsels, I mean, counsel, a big play and part in that. You know, we’ve seen the recent floods in Victoria, our Flemington racecourse being, you know, one that comes to mind straight away where the council approving levies, which Mother Nature has attended, not to, you know, listen to. So I think the councils and government have a lot to answer for that perspective. You look at the recent floods in Lismore and it used to be one in 100, now we’re getting three floods a year. So I think we’ve got enough technology, we’ve got enough sophistication where we need to be looking at councils to say, Look, you have the data, why would you approve high density living in these low lying areas, which it’s just a matter of time. We have a disaster. 

Daniel: Vishal Kapoor, director of McLardy McShane Group based in Melbourne, Thanks for your thoughts and for sharing some time with IB talk. 

Vishal: Thank you, Danny, and really appreciate the opportunity to talk. 

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