How brokers are adapting to business as unusual

Insurance broking has proven to be resilient through major economic cycles – and the current global pandemic is no exception. With a heightened awareness of risk, clients depend more than ever on good advice. And brokers share an advantage: the strength and trust within their client relationships.

However, the unexpected consequences of lockdown have also provided those managing insurance broking firms time to reflect. How can we be prepared for what’s next, and adapt to the changes all around us?

I spoke with Edgewise Insurance Brokers CEO Richard Coloretti about his experience. He shared his thoughts on adapting to new technology, the importance of deeper client conversations – and how complacency within the sector could in itself trigger new opportunities.

How has COVID-19 been a catalyst for change in your business, and in the sector?

Richard: Apart from working remotely – which means less immediate access to company resources and being unable to see clients in person – there has been little change to our own work practices. Having robust, secure technology has helped minimise the impact on both our business and our ability to maintain client service standards.

The way we communicate across the industry will to some extent permanently change. Before COVID-19, many people had never used Zoom, Teams or other video conferencing platforms and considered them impersonal. Now our staff and most clients are more than comfortable using them as an alternative to physical meetings.

Even though many small to mid-sized businesses have taken a revenue hit, we haven’t seen significant levels of insurance cover cancellations or changes. Why do you think this is?

Richard: Firstly I believe Australia’s small businesses have been remarkably creative in finding ways to keep trading and using government support effectively. And our primary role as brokers is to help clients through this, especially those in the sectors hit hardest.

As brokers, we’ve taken the initiative, in helping clients understand which insurance levers they can pull, and while there may be areas where they can reduce or remove cover, it is important they understand the risk and potential impact in doing this.

For example, we look after the insurance for a large restaurant in Melbourne’s CBD, and although it has been closed for four months, it still needs protection from fire or theft.

There will always be a need for business insurance in Australia; the risks of not insuring are too high. In the current environment where cost management is essential, business owners have become more interested in understanding exactly what they’re covered and how to better manage risk in their business.

Given the potential impact of a recession, are you still seeing opportunities with new clients?

Richard: In an environment of uncertainty, there lies opportunity. As in most periods of crisis, it’s likely that some businesses will falter. But others will come back stronger – and new businesses will emerge. 

Our business is all about our networks and relationships, and if we’re helping clients to navigate the challenges they are confronting particularly in these uncertain times, there’s little doubt our business will benefit down the track.

How do you see the role of risk advice evolving in the near future? We’re seeing many more brokers recommend premium funding as a way to deal with cash flow pressures, for example.

Richard: In times of economic stress, brokers can play a crucial role in helping businesses to remain viable. Insurance premium funding can be part of that.

We can also be a partner to insurers, by helping them understand those changing needs so they can develop new solutions rather than simply reduce capacity or walking away from less sustainable products.

Interestingly, we haven’t yet seen a huge uptick in cyber insurance – despite the growing risks with the rapid adoption of new technology. Usually cyber is driven more by contract requirements for our clients, rather than their awareness of exposure. Many business owners believe they’ve outsourced their risk to their cloud providers. We need to continually educate our clients in this regard.

What challenges have you experienced with managing remote teams? What have you learned from this?

Richard: We are very team-oriented and inclusive – our culture is all about working together across the whole business. So while the remote working environment has created physical ‘silos’, our staff have been very resilient and showed an ongoing willingness to help their colleagues.

This experience has really tested that culture. It’s been important to set expectations upfront, and reinforce our common values and purpose. Our business is all about our people and clients, and they go hand in hand. Employee health and wellbeing has been a big part of our communication and focus.

We invest heavily in our graduate program and in training and developing our younger staff, and this has been difficult to manage remotely. The most effective way to accelerate learning is through on the job training, and working in an environment where mentoring is encouraged and practiced. So while it is important to have a flexible working environment, we also need to be true to our culture.

How are you preparing your business to be ready for the next disruption?

Richard: I think brokers are lucky to be in a recurring revenue business. It doesn’t mean we’re not affected by crises like this, but we do have a natural hedge against many challenges.

Being diversified also makes us somewhat resilient. We have an online business as well as our more traditional client engagement business, and we’re not really exposed to any one client or sector.

I’m confident our culture and business model will hold us in good stead for the future. But we now know just how important good technology and systems are, along with the flexibility to adapt quickly to change.

How Macquarie can help

The Macquarie Insurance team is here to help you with personalised support, delivered by industry specialists.

To find out more, contact your Macquarie Relationship Manager, call 1800 442 370, or visit macquarie.com.au/business-banking/insurance-industry