“Real estate agents have to take on a certain amount of stress on behalf of our clients” | Insurance Business America
Gallagher boss explains how brokers need to stay ahead of the curve
By David Saric
A third-generation insurance professional, Bill Baker (pictured), US Broker Sales Manager at Gallagher, has seen the industry transform in many ways, including through the role of broker. Gone are the days of simpler claims settlements, strict coverage limits and worryingly tight capacity – and with that, new brokerage roles have come to the fore.
“Brokers have to take on a certain amount of stress on behalf of our clients,” Baker said. “We need to do this by being right on the front line, being very knowledgeable about all forms of reporting with all the connections that we have and sharing that information in a very transparent way.”
During a sit-down interview at RIMS 2023 in Atlanta, Baker spoke to Insurance Business about how the industry and brokerage profession have evolved since the restrictive markets of the 1980s and why cyber coverage is a sign of a strong collaborative ethos.
“One of the most difficult markets of my life”
Throughout his decades-long career in the insurance industry, Baker has witnessed various successes and challenges in the industry. The hard market of the mid-1980s, however, is remembered as an exercise in resilience and resourcefulness.
“Between 1985 and 1987 it was definitely the toughest market of my life,” Baker said. “Capacity went extremely low, which was quite problematic because even in similar scenarios, there was always capacity that was refilled fairly quickly.”
While today’s market may be limited in certain areas, availability is not yet dangerously low, in part due to an expansion in coverage options.
“The main difference between the 1980s and today is how the covers evolved,” Baker said. “Back then, there were no employment practices, no cyber liability, and even the D&O risk wasn’t that great.”
In the last 40 years, claims have developed steadily, which also made it necessary to develop the insurance market.
“We are in a much more litigious phase of society, which reinforces the importance of comprehensive yet targeted reporting to best protect a company from potential litigation,” Baker said.
On a positive note, the extremely rigid market conditions of the 1980s also helped create a greater range of options for specific needs.
“The 1980s were a turning point,” Baker said. “People were panicking because they wanted to buy a certain limit on a policy but couldn’t. This created a desire to buy more coverage, such as D&O, or higher roof coverage.”
“The transactional part of the business is taken care of, but you can’t stop there”
Having experienced industry-wide triumphs, setbacks, and everything in between, Baker has seen something of an evolution in the role of a broker.
“In today’s world, the transactional part of the business is taken over, but you can’t stop there,” he said. “You have to be very consultative and adaptable when it comes to changing or challenging a program and do that every year.”
Brokers should avoid being static or entering into a comfort zone with their clients, but rather look at risk from a more dynamic perspective.
“You can’t just focus on cover and loss control,” Baker said. “Instead, you should also look at how risk has been redefined into six distinct components and understand each of these unique facets to optimize a client’s overall cost of risk.”
Brokers must also use their bounty of resources to stay ahead of the curve and keep their clients’ best interests at heart, even though that may seem like unnecessary forewarning in the present.
“Our job is to be one step ahead,” Baker said. “While we can’t predict the future, we can at least look at trend forecasting as we often talk to our clients four to six months before the actual renewal date and want to have a more robust strategy that’s best prepared for any curveball that might arise.” .”
In fact, the complexity of today’s market makes it harder than ever to analyze the health and prosperity of the industry as a whole.
“The industry is very fragmented due to its diversity, which means brokers and other professionals need to examine each segment individually and become champions of that sector,” Baker said.
How cyber coverage is built on strong collaborative principles
As previously mentioned, cyber insurance and liability is a relatively modern development in insurance, but has now become a staple in the industry due to the digitization of both commerce and life. As a result, cyberattacks have increased in severity and frequency, bringing with them a deluge of risks that may seem unprecedented.
However, a synergy has been created between insurer and insured to address these concerns with a more individualized approach.
“The cyber market is a really great example of the partnership between customers who buy insurance and the companies that offer that insurance coverage,” Baker said.
“We can step in and help insurers ensure their customers know they are good risk versus high risk, while ensuring they are following the right risk mitigation requirements to get the right insurance coverage they are looking for.”
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