These companies are quickly internalising new economic realities which call for a fundamental re-orientation of business and operating models. A clearly defined and wellexecuted strategy for capturing new growth opportunities in the region is more than likely at this critical juncture to reap significant payoffs over the next few decades. A third reason that this period is significant for the insurance broking sector is the intensity of focus that is now being directed at the effects of climate change. Globally, catastrophes are increasing in frequency and intensity. The cost of catastrophes is estimated to have risen by USD870 billion in real terms between 1980 and 2011. In 2013 alone, global economic losses due to natural catastrophes amounted to USD131 billion. Only about a quarter of this was insured. According to a report released last week by the United Nation Economic and Social Commission for Asia and Pacific, more than half of the world’s 226 natural catastrophes last year occurred in the Asia and Pacific region. Floods account for about 40% of the natural hazards affecting the region. Some 80 million people were affected by natural disasters, with economic losses tallying up to nearly USD60 billion. The region was found to be largely unprepared in its response to widespread floods and landslides. Despite the recurring nature of these events, only a fraction of properties and assets are fully protected against risks.
While this may be a legitimate view, technology will nevertheless have an important impact on the kind of services that brokers are offering their corporate clients and what clients are prepared to pay for such services. In many emerging markets, the technology revolution is starting to gain more traction in the delivery of financial services, including insurance, following greater stability in internet connections, advancements in security and payments infrastructure and strengthened data protection frameworks in these markets. Correspondingly, brokers need to strategically review the strength of their value propositions in this changing environment and actively seek to lift their own services by leveraging on technology. These four reasons are just a few that should prompt the insurance broking community to reevaluate their business and operating strategies going forward. All of them – the fallout from the global financial crisis, Asia’s growth trajectory, the focus on climate risk, and more entrenched technological revolution in the delivery of financial services – are converging to re-define expectations, possibilities and risks in the insurance broking sector in a profound way that will determine if a firm will thrive or be marginalised in the coming decade. Going forward, brokers will be expected to play a far more significant role in delivering innovation and choice by developing deep knowledge of the industries that their clients operate in, and working with insurance providers to bring new products into the market that are meeting the changing needs of businesses.