Mid-market firms contribute significantly to the economy, yet the insurance offering for them is disjointed and complex, according to Joe Grogan, CEO of corporate division at Marsh.
Mid-sized firms are the backbone of the UK economy, contributing more than one-third of private sector gross domestic product, revenues and employment.
Despite this sector’s size and importance, its specific needs are still being largely overlooked by the insurance industry. Much attention is placed on addressing the challenges that large clients face. Similarly, there is an industry-wide focus on developing opportunities associated with small businesses, through digital and affinity programmes. But what of the ‘silent middle’?
Due to the increasingly interconnected nature of risk, businesses – regardless of their size or sector – are more vulnerable to major threats such as cyber risk, supply chain disruption and geopolitical events. Mid-sized firms are no exception. In fact, they need risk advisory support in much the same way as larger firms do.
Currently, the insurance market for middle-market risks is largely disjointed. Policies can vary from insurer to insurer, and policy documents are often long, complex tomes with hard-to-interpret clauses. Approaches are largely product-led and lack the holistic risk framework this segment both needs and deserves.
Frustratingly, despite work in recent years by industry bodies such as the Association of Insurance and Risk Managers, brokers and some insurers, a great deal of confusion around claims advocacy and support prevails. All too often, mid-sized firms are perplexed by exclusion clauses and, in the event of a loss, the amount of time taken to resolve claims. When ‘the rubber hits the road’, all too often our industry is found wanting.
Relationships based exclusively around product interactions add little value. Essentially, what mid-sized firms need is for their insurance and risk advisers to take an industry or sector-led approach to their risks, which is backed by strong data and analytics capabilities - particularly on motor and casualty business. This approach should empower clients to make more informed decisions around risk and assist in the recovery of insured losses, if the worst were to happen.
Like any other firm, mid-sized companies need to be confident that they are resilient enough to recover from any type of event that might disrupt their operations. The vast majority of larger firms employ dedicated risk managers or insurance experts to guide them. Generally, mid-sized firms do not have sufficient in-house resources and, as a result, their voice often goes unheard in the insurance world.
The key to the insurance industry serving the UK mid-sized market well should begin with understanding that there are significant similarities to the large client space. These firms regard themselves as corporate businesses, through the lens of the industries and sectors to which they belong, rather than the archaic insurance industry catch-all of middle market.
By focusing on this, there is an opportunity to create fully integrated and resilient solutions for these firms, in which the industry can work together with clients to deliver contract certainty in a simplistic, rational and holistic way. These solutions should move seamlessly from pre-loss risk management, through to strong post-loss advocacy and claims certainty. It is the role of the broker to drive this approach through the industry.
UK firms are facing some of the most challenging times in post-war history, from uncertainty around the UK’s exit from the European Union to the spectre of cyber risk and terrorism.
Our industry needs to do more to help protect the future of the UK’s backbone from these events, so that they can pursue growth with added confidence – and, ultimately, provide the goods, services and skilled employment on which we all rely.
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