View from the Top: Biting the hand that feeds

Obviously they must do what is necessary to steer their businesses through tough conditions, but this withdrawal of support on a national basis is not in the best interests of brokers or end customers.

Watching the gradual migration of control back to head offices in recent years, the commonly aired complaint by brokers about access to decision makers is likely to remain for some time. From an insurer’s perspective, central control is easier in some ways – it avoids potential arguments about central cost charges; more easily ensures price consistency nationally; and brings all the other benefits of having risk and pricing controls under one roof.

But this ignores the fact that having underwriters close to brokers is best for all parties. Both operate in the same market and have the edge in understanding the local trades, risks and competition. Centralising control in tricky conditions is nothing new, but the solution is the opposite.

Devolving power to permit a larger degree of autonomy and authority – allowing teams to manage regional profit and loss accounts to control their spending and earning, set their targets, control the surplus and make sure they know they have got to live with the results – treats underwriters as adults and gets the best from them.

Clearly underwriters need to be experienced before they can be empowered with authority to this degree. They also need clear goals and parameters to work to so there is no ambiguity. With authority comes responsibility and accountability, so controls and measurements must be in place to oversee activity and allow underwriters to monitor their own results accurately and effectively.

Ultimately, visible, service -orientated, empowered, local, accountable and responsible underwriters are what brokers want and respond to. If this approach is tightly focused, it is proven to yield improved underwriting and risk acceptance, and trading bonds are strengthened as brokers want to trade with underwriters they respect and trust. Brokers are the hands that feed insurers, so starving them of the support they deserve is not the most effective or viable approach in the long run.

Charles Earle
Chief executive, Arista Insurance

This article was first published in the 4 April 2013 edition of Post