It’s a Three Way Street

The insurance industry infamously thrives on gossip, and the ongoing speculation and news about mergers and acquisitions (M&A) involving brokers and carriers is a constant source of interest for the London Market. M&A might be a hot topic in the City of London, but what is often overlooked or regarded as an after-thought is the impact that this might have on the most important player in the market – the client. The specialist insurance industry is unique. It has historically been built upon close and trusted three-way relationships between carriers, brokers and clients, and it is at its most valuable when it operates in this way. No matter who comes and goes in the M&A merry-go-round, clients are looking to be reassured that the industry will continue to provide them with the complex risk solutions that will allow them to keep transacting business through these current uncertain economic and political times. In my opinion, the finely balanced tripartite relationship between carriers, brokers and clients will undoubtedly evolve, as each party has to address multiple challenges. The high catastrophe losses of the past two years have severely eroded the bottom line for many property & casualty (P&C) insurers and reinsurers, forcing them to carefully examine their portfolios, and in many cases withdraw from lines that are not profitable. With fewer carriers in the market, insurer and reinsurer panels will shrink, meaning that brokers will have less choice when trying to place coverage for clients.