In a wide-ranging interview with this publication, Clarke said: “It is impossible to overestimate how difficult the environment is for clients.
“We’ve actually started up more than twice as many captives in the year to date as at this time last year because people are pretty intolerant of being held captive to this market and they want to control their own destiny.”
The Marsh executive added that she expected the balance to continue to tip in that direction while the current rating environment persists.
She added that for some clients, Marsh JLT is advising “let’s just rip everything up”, examining each piece of coverage they buy and rebuilding programmes in their entirety.
In particular, Clarke highlighted the D&O market as one in which clients were struggling with rising rates or even to secure capacity.
“We monitor price changes around the world and we have just completed our 12th consecutive quarter of price increases in D&O, so with every shred of our being our total focus is on how we can improve the situation for our clients,” said Clarke.
“We can’t price for the underwriters, but we can make sure that every single option is on the table.”
With the merger of Aon and Willis Towers Watson set to complete next year, and MMC’s own acquisition of JLT closing 18 months ago, the level of consolidation in the broker market has given rise to fears among carriers that too much power sits in the hands of intermediaries in certain lines or regions.
Although she acknowledged the critiques of consolidation some offer, Clarke said: “A lack of choice is bad for the market, but I don’t think that there is a lack of choice in the market today.
“The market has seemed to respond to that almost instantaneously every time there is a change in the market. However, a merger of this scale is unprecedented.”
In response to carrier concerns about the degree of power exercised by the largest intermediaries, Clarke said: “If they are scared, boy, it sure is hard to tell. If we could make them reduce these prices then we would do so.”
The integration of JLT into MMC, particularly in the London market, was “tough”, Clarke conceded.
“If you have really talented people in both [businesses in a merger], a structure that works in both places, nobody really wants to make a change. That can be really hard,” she said.
However, she stressed that passing through major change revealed a lot about the people that remained with the organisation. “Even when the integration was at its most challenging, the way that people came together to look after their clients and their teams showed great commitment.”
When Covid-19 brought lockdowns in most major markets, the sector was forced to conduct most of its business online and this has led to high client retention for brokers – as well the corollary effect of a greater challenge in winning new business.
However, Clarke said as clients become increasingly comfortable with the technology, business is beginning to move with greater regularity.
“Building a relationship on the computer is creepy and weird, but it’s getting less weird. I think people are getting used to it,” said Clarke.
She added that the significant savings made in travel costs since the start of the pandemic, as well as the relative ease with which business has shifted online, have been a wake-up call for Marsh.
“We’re saying, ‘wow, we sure did travel a lot’. We will never travel that much again,” said Clarke.
“I expect we will get used to doing it like this, and think we will do it pretty successfully. This might be a more effective way to do it in the end.”
Modernising the market
Questioned about prior predictions over the years from a range of senior figures that the insurance market was on the brink of rapid change, Clarke acknowledged that these forecasts had not come to pass.
But in a discussion around the industry’s need to address unmet client need and improve efficiency, she said that if the industry doesn’t change, “we’re just dead”.
“London has this reputation for responding quickly to client needs. If we fail to do that, then just being a P&C place is not going to be the answer,” said Clarke.
She added that Marsh JLT is working to spot the unmet needs clients have – for cover that helps mitigate against climate risk, for instance, or insurance for intangible assets.
“We have to make sure that we’re [providing] insurance in the way they wish to purchase it, rather than offering them something to purchase that is the most convenient to us,” said Clarke.
She added that, within the Future at Lloyd’s work the Corporation is carrying out to modernise the marketplace, the claims workstream will be “the most impactful” for clients, who she said are often “frustrated” by payment delays.
Improving the speed and ease with which brokers can place risks electronically will also be a major advantage, Clarke noted.
Although she pointed out that innovation has been a constant theme for 30 years with seemingly little real change, Clarke said the Covid-19 pandemic – along with increasingly sophisticated insurance buyers – means the industry is now on the cusp of genuine technological transformation.
This includes developments underway at MMC, she said.
“MMC have had projects sitting in the digital lab for a long time, and really now the changes that are being launched are pretty breath-taking,” she added.
“Dan [Glaser, CEO of MMC] told me MMC was like Nasa about 10 years ago. I don’t think it really was then, but the progress has been outstanding.”
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