"The industry has got to find a way to adapt"

“The industry has got to find a way to adapt” | Insurance Business America

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“The industry has got to find a way to adapt”

Gibson boss Tim Leman discusses the industry’s retention challenges, the importance of risk management advisory services, and more

Insurance News

By
Ryan Smith

The world is changing, and the industry needs to adapt with it, according to Tim Leman (pictured above), chairman and CEO of Gibson Insurance, a brokerage and risk management advisory.

Leman recently chatted with Insurance Business about the industry’s need to attract and retain talented technicians, the importance of brokers’ risk management advisory role, and the need for carriers to work harder to reduce uncertainty for their insureds.

IB: What do you think is the biggest challenge facing the broker sector at the moment, and how should the industry respond to it?

Leman: It’s talent that has the technical chops to support clients and navigate this complex market to secure the best solutions. Getting in front of decision-makers is part of sales, but delivering on all those viable solutions is a whole different ballgame. Both of those things – sales and service – take talent, but what we’re seeing out there is the pool of technicians is shrinking, while the complexity of the deals is intensifying.

The industry has got to find a way to adapt to the greater workforce reality that people can work from anywhere. … We’ve got all the technology in our industry to support that move to working from anywhere, but all the firms I’m speaking to – the brokers and the carriers – they don’t have the culture to support it. So those brokers that figure out the culture piece are going to grab the best and most talent – and they’re going to win.

I think this whole talent thing will ultimately be one of those main drivers where you see a lot of brokers selling because they just aren’t able to access the kind of technicians they need nowadays.

IB: And you think that’s primarily a culture issue, with brokers just not adapting to the new reality enough to keep people on?

Leman: Yes, I think it’s culture. It comes in on the recruiting side of things, and it comes in on the actual workforce policies on how those remote workers are treated – and how long they stay. Because if they don’t stay, it just becomes a kind of mercenary culture, and that’s not going to do the trick over the long haul.

2024 and beyond

IB: What lines of business do you see thriving in 2024 and beyond, and what lines do you think will face challenges?

Leman: Workers’ comp and a lot of the management liability space are actually turning slightly in the clients’ favor. … Client renewals on these lines should fare pretty well. How long that lasts is kind of hard to say, I suppose, especially with workers’ comp.

IB: Why especially with workers’ comp?

Leman: We do a lot of health benefits in addition to property-casualty and workers’ comp. And what I see running through workers’ comp these days is that all the medical and healthcare-related parts of the claim are so stressed financially. So it only seems logical this is going to continue to put pressure on workers’ comp losses.

It feels like property capacity also continues to face losses – and I think the landscape on that feels a little bit better than it did even a year ago. But with all the severe weather and all the inflation, and the skilled labor and trade shortages and all the changes in the reinsurance marketplace – I think all those are going to continue to drive [challenges].

We’re seeing the greatest reset in the property market in decades. So it feels like maybe there’s a bit of temporary flattening right now that might be in the clients’ favor, but you look out over the long-term horizon and it seems like those are going to be pretty hard lines of coverage for a while.

On the auto side of things, I think we’re going to continue to face obstacles in spite of what’s going on – maybe a decade’s worth of rate increases and much tighter underwriting standards. But those fleet-driven programs are just going to continue to face rate pressure on the primary auto and excess liability programs.

Risk management consulting – a vital piece of the puzzle

IB: So how do brokers help their clients navigate a market where insurance is becoming more and more expensive?

Leman: You know, this is really where risk management consulting from brokers comes into play. And that’s something that’s always talked about – but what does it mean?

When you think about those consulting services with property, it’s helping our clients, say, interact with sprinkler-system contractors, because that’s not something they do everyday. It’s all the ISO stuff to help them get that accurately rated and scored.

One of the things I see us in the broker space needing to do is helping them sort out the “need to haves” from the “nice to haves” – because the carrier loss control reps want everything done all at once, all the time, and some of it’s just not practical from an economic standpoint. You know, can they really afford to, say, reroof all their buildings at once? We really have to help them prioritize and sort those things out.

On the fleet side, I think it’s helping clients stand up all their current controls, whether that’s the telematics or driver monitoring or policies and so on. That’s a real key space we spend a lot of time on, and I think it’s helping them really create and assign accountability for the safety and risk management within their companies.

So it’s getting out of just a written program – which most clients have today – and trying to make it operable, making it someone’s actual task to complete and making sure they have the tools to do it.

IB: So you think more brokers should take a serious look at risk management advisory for their clients.

Leman: Absolutely, yeah. On one hand, our clients need it and that’s what we’re here to do – serve our clients and take good care of them. On the other side of it, that’s good for business, too. It keeps us relevant.

IB: And if I’m running, say, a coffee shop, I may not have the first clue what kind of coverage I need, because that’s not my area of expertise.

Leman: Right. I grew up on the health benefit side of our business, but I have a degree in insurance and risk management. But in 2020, when my wife and I started a small business where we have short-term rental properties. And I don’t think I really understood all these things until I was sitting in that chair. … I really got a chance to appreciate it from a personal perspective.

Don’t create more uncertainty

IB: What priorities would you like to see the industry focusing on over the coming year?

Leman: You now, we’re in the business of reducing uncertainty – and I think our industry has created more uncertainty, if that makes any sense. We’ve had some really bad outcomes that have been delivered to clients in recent years, whether that’s rate increases or reduced – or entirely eliminated coverage.

All the reduction in capacity by the carriers – it’s a situation where so many of the clients out there are getting, you know, half the coverage for twice the price these days. I think with all that uncertainty that we’ve introduced as an industry, we’ve really got to think about how we reduce that. Because we’re the backbone of commerce – we’re the thing that guarantees that commerce happens, that businesses can flourish, that the economy grows.

I guess it’s easy to sit here as a broker and say all this, because we’re not the ones paying the losses – but there have been some pretty lousy outcomes by the carrier industry. The very industry that’s supposed to bring some certainty. It’s been a really volatile ride recently.

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