How is the reinsurance broker landscape evolving?

How is the reinsurance broker landscape evolving? | Insurance Business Canada

Reinsurance

How is the reinsurance broker landscape evolving?

Amid market consolidation, the role of the broker is changing

Reinsurance

By
Mia Wallace

‘Between tradition and innovation, how is the broker landscape evolving?’

Understanding why and how the re/insurance broker landscape is changing was the order of the day at a recent panel discussion during the 2024 Insurtech Insights Europe conference. Amid developments in technology, data, competition and regulation, Oriol Gaspa Rebull, head of UK property analytics at Aon Reinsurance Solutions noted that the interesting timeline of the evolution.

“About five or six years ago, the whole broking landscape got extremely nervous [about] ‘insurtech startups’, thinking that things would be completely different and all of us would be out of jobs,” he said. “I think we’ve evolved to be a lot more savvy, and to have a lot more knowledge around what is needed.

“What’s interesting is that now, from insurance companies, to brokers, to reinsurers, to corporate clients, people have a much better idea of what they need and what kind of tech solution they’re looking for to solve that problem. And we’ve had to adapt to that.”

How brokers are changing

Offering a reinsurer’s perspective on how the broking landscape is changing, Cecillia Sevilliano, head of strategic partnerships at Swiss Re, said the evolution has been marked by several dynamics. The first theme, she said, is that of consolidation which is seeing larger brokers acquiring smaller brokers with a strong footprint.

Brokers are also, she said, moving towards becoming advisory services and providing analytics. Brokers are not only focusing on the placement of risk but really expanding the services they have to offer.

The third theme is the restructuring of data that is taking place across the sector, which is quite a new development, and one which means brokers are now buying more data, and structuring that data, as well as building their own assets.

Playing Devil’s advocate, panel moderator David Clamp, from the Camelot Network questioned whether, at the end of the day, brokers are only really interested in commission and getting GWP in the door. In response, Gaspa Rebull highlighted that while commission is very important, the evolutions taking place in the market reveal brokers’ focus on finding different ways to do business.

“Rather than just concentrating on the transaction and maximising that transaction, [it’s about] how I can help my client, and as they grow, grow with them,” he said. “And that’s quite a paramount shift. That means you can better leverage your data and how you [differentiate] your data from the competition when you all have the same numbers… That alternative view is what informs the clients and therefore the clients trust you to develop business with them.”

As a reinsurance broker, he said, the best value you can add is by getting closer to the reinsurer and the client, a relationship built on transparency. A lot of that work is driven by underlying data analytics and the new technologies that support reinsurance brokers in maximising their use of that data.

How broker relations are changing

Amid so many developments in the broker landscape, the relationship between the broker and the reinsurer is also evolving, Gaspa Rebull said. Where traditionally, the broker was seen as the transaction vehicle, the new advisory component to what they do now means they need to focus on growing the trust of their clients. That means giving the best advice possible and understanding that it’s no longer just about the transaction itself, but also about helping buyers actively manage their risks.

“Up to now, a broker might have been seen as someone coming to your door and trying to sell you a shovel, and constantly pushing you,” he said. “Whereas now, we’re coming to the door and saying, ‘do you have any holes that you need to dig? Because I have the tool to help and if you have no holes to dig, I’ll move on’. It’s just a different perspective.”

Sevilliano emphasised that the role has become more multi-dimensional. It’s not linear anymore, she said, and on one side, reinsurers have a great deal of data, models and platforms but, for some time now, they have also been providing clients with insurance and client advisory services and analytics.

“So, it’s interesting because, on one side, we are collaborating and on the other one, we are competing,” she said. “And it’s a fair competition because we know and we respect each other, and so what we’re trying to do is find this win-win spot. Today, brokers have become reinsurers’ clients. They’re buying our tools, our licencing, our platforms, maybe some data as well.

“We are co-creation partners. So, we are bringing together capabilities, bringing together knowledge, and our financial power to come to market with something really innovative. And lastly, some brokers are becoming distributors, re-sellers of our solutions. It’s really interesting because it’s an ecosystem with dynamics on all [sides]. We work well and trust, of course, is the first step – but once we get to that point and identify that sweet spot, it’s powerful.”