Marsh went through a year of transformation in 2016; and just when you thought things were settling down, it picked up Landmark early this year, adding 80 new authorised representatives to its fold in the regional centres. Insurance Adviser caught up with Marsh Australia CEO Scott Leney to find out what else is in store for the big-city broker.
Insurance Adviser: What was the thinking behind the partnership with Landmark?
Scott Leney: Landmark actually came to us; they were interested in our view on how they could create more value from their insurance business. We found that each had complementary skills and capabilities, and some alignment in the way we wanted to take the business forward.
Marsh has always been known as a big-city broker. Over the last couple of years, where it made sense, we’ve been expanding incrementally into metropolitan areas, and the ARs that have joined our network have helped us do this. To move into the rural space, we really needed a platform of sufficient scale. So while a partnership with Landmark was not something we had actively sought, it is a terrific opportunity to have a presence in rural and regional Australia, and there is a lot that we can learn from our new partners.
I think that collectively we have an unrivalled value proposition. With Landmark’s brand in the rural and regional communities – their local relationships – coupled with the placement, advisory and technical expertise of Marsh, we will be able to do more for Landmark clients than has ever been done before.
WHAT DOES NIBA MEAN TO YOU?
IA: Marsh just last year went through a bit of a restructure. How has the market responded to that and, now with Landmark, how does it fit in that picture?
SL: While Marsh has always been client-centric, the restructure was about enabling our colleagues to deliver more to clients – and that is the lens through which we consider everything these days: what does it mean for our clients, what does it mean for colleagues. For instance, the restructure brought all our placement activities under single leadership to better harness the premium volume of Marsh to benefit our clients. We also brought all our industry specialisation teams under common leadership. We knocked out over 50 per cent of our internal P&Ls in the pursuit of simplification and collaboration.
Market feedback has been very good. Our new structure has helped us deliver the best of our industry and specialty expertise, while tailoring our services and solutions to the unique needs of clients across four key client segments – Risk Management, Corporate, Commercial and Consumer.
Our commercial and consumer businesses have operated under Marsh Advantage Insurance since 2013 and the brand has found strength in those markets.
Landmark will now sit within the commercial part of our operations but, given its size, it will exist as a stand-alone rural practice alongside our AR business.
The other stable of the Marsh Advantage Insurance brand, our Consumer segment, is no less important to Marsh and our focus there is on advice, distribution and enhancements in client facing technology.
In the Corporate segment (middle market), we spent a lot of time researching that particular client community, understanding their needs, developing a value proposition and combining industry specialisation with packaged insurance solutions to offer something unique to the market.
We have also always had a large presence in the Risk Management segment (large corporate). These clients have complex risk needs and really need a trusted risk adviser to help them navigate through a rapidly changing and volatile world. So we see that particular part of our client base as being in need of our service more than ever before.
IA: There’s been a lot of talk this year about the market hardening. As a big international broker, how is Marsh preparing for this?
SL: There is already a modest hardening in certain areas of the insurance market but it is not across the board.
There is always so much talk about the market and conjecture around when the hard market is coming – but even if it does come, it will most likely be as a consequence of a market defining loss event of a size that we haven’t seen before. Historically, it only lasts for a short period of about 18 months to two years at best. Yet there’s all this energy expended on worrying about when the next hard market is going to come. Nonetheless, it is important to be prepared for it and we have training prepared for this.
We see more opportunity than risk in the areas where we engage… but there’s no doubt that we need to play a leading role in transforming client interaction through technology.
I think insurers have to be careful not to overcook their response and to make sure they don’t apply it with a broad brush and risk insulting clients who continually invest in improving their risk profile through risk management and the make-up of their portfolios. That’s important because insurers have tried the broad-brush approach previously and it has rarely worked.
Indeed, for certain underwriters and brokers, these [soft market] conditions have prevailed for such a long time – it’s the only market environment they know.
There’s definitely been far too much emphasis on price alone in recent times.
So as a broker, how do you navigate through that environment and demonstrate that you are getting your client the best deal while providing a professional and ‘value-based’ recommendation? That is the key… Marsh will always represent our clients first and foremost but we will do the insurers the courtesy of understanding their points of difference and portraying this to clients in value-based recommendations.
IA: What do you see are the emerging risks for Australia?
SL: Based on the World Economic Forum Global Risks Report, that MMC co-authors, the top five risks for Australia are: an asset bubble (the impact of a housing market crash), a fiscal crisis, large cyber-attacks (this risk ranks relatively higher in Australia and NZ compared to even other developed economies), rising unemployment and energy price shock (we are already seeing the impact of energy prices in many industries).
Cyber risks will be an interesting space to watch, and the recent passing of mandatory data breach notification laws is a terrific opportunity for the market to provide some real value to clients. We can expect greater penetration rates of cyber insurance leading into the next 12 months.
But global risks are important too. It is inescapable that Australia will be affected. It is really for a corporation/organisation to overlay such risks against their own risk register and sense-check that they’re thinking holistically about what the risks could be and how they could impact on their business.
In addition, there’s no doubt disruption is coming and in fact is already here. The reality is that there will be more of it and at an accelerating pace. Existing distribution platforms are going to be disrupted. It’s happening in the consumer space… and the small end of SME lines already. We see more opportunity than risk in the areas where we engage, which is mainly around advice and contestability for clients, but there’s no doubt that we need to play a leading role in transforming client interaction through technology.
What all this means for Marsh as we look toward 2020 is that human advisory will still dominate the top end of the market but client facing technology will be critical. Distribution will continue to consolidate in the middle market. Digitisation in small commercial will only accelerate. Alternative capital is being deployed through insurers and reinsurers who provide solutions to clients and in the future, I think you’ll see this capital finding more direct ways to get to the risk holders. There’s a role for brokers here.
IA: Looking at the industry as a whole in Australia, we struggle a little with attracting talent. How is Marsh tackling this issue?
SL: It’s a fair point that the industry has an issue with attracting talent.
I think the main issue with attracting talent is a lack of awareness. We’ve got an industry that we should be proud of… It’s an exciting career, but too few university graduates and school leavers know about it. There’s not a lot of awareness about the opportunities… in many ways you get to learn more about your client’s business doing what we do from the risk and insurance side than you would in any other industry. And it’s really rewarding and purposeful work.
I think it’s an issue that needs to be tackled as an industry. This is something that NIBA needs to continue to do its good work, with more help from member companies like us. We need to raise the profile of our industry in schools and also in universities.
I think that greater diversity in our industry could help as well. Within Marsh, we’ve been preparing to materially lift our game in this area as a more contemporary organisation. The main reason for this is that it is good for business. But it’s more than that to me. If you think about what Marsh is, it’s a people and brains business; so what we aspire to be as an organisation, is in many ways, about the type of people we want to be.
[Marsh was one of the sponsors of the Dive In Festival in Sydney last year and has committed to it again this year.] Dive In provides a perfect forum for our colleagues to participate in raising awareness about wellbeing, diversity and inclusion, as well as mental health – an area I particularly want to support.
I’m the executive sponsor for diversity and inclusion across the Pacific. We have backed our statements up with action. We started first with a working group to identify what is best practice and assessed where we stood. As a result, so far, we have formed a diversity and inclusion council; and conducted unconscious bias training for the Australia and New Zealand executive team which is now being rolled out to the next tier of management.
We have a longer-term objective to be leading in diversity and inclusion. It’s not about checking a box… if your colleagues don’t have a voice and their voices aren’t heard, you are going to be operating in a way that is too narrowly defined, and you are not going to be getting the best out of people.