The controversy surrounding business interruption (BI) claims during the pandemic has caused a huge amount of reputational damage to the insurance industry. As the situation unfolded, it became clear that many of the policies at the centre of the dispute were ones where the broker had crafted the wording.
Now that the dust is finally settling, can schemes brokers and MGAs expect a drive towards standardised wordings and will this experience mean that the delegated authority (DA) model is diluted or even on its way out?
“I’ve been told for many years that DAs are going to be used less and less as a route to market,” says Gary Head, Director of Delegated Authorities at AXA Insurance.
“The reality is that the DA and schemes space has been growing for 20 years, representing about 15-20% of the commercial market, and it’ll continue to prosper.”
Gary says that AXA has been broadly consistent in its approach over the last 30 years and is convinced that it’ll remain an important and even necessary route to market.
However, he adds that the BI experience has made it clear that clarity of coverage is paramount and not explaining that properly leaves too much room for uncertainty and challenge.
It’s inevitable, he says, that insurers will want to be crystal clear on the coverage which will mean a stronger preference for standardised wordings. But he argues that this desire for greater clarity shouldn’t alarm brokers. Differentiation must and will be provided.
“We’re not changing our approach to the level of underwriting authority, but we’re working hard with brokers to make sure there’s clarity about what the customer is and isn’t buying. Leaving it silent isn’t an option,” he argues.
“Where an insurer is trying to achieve that, brokers shouldn’t see it as a threat but an opportunity – they can still get bespoke enhancements into their wordings.”
Despite the uncertainty that the pandemic brought, Gary says that AXA is very much open to new DA partnerships, ones that have longevity and mutual support underpinning them. In fact, he wants any DA partner to feel part of the AXA ‘family’.
“We’re not here just to provide capacity but to genuinely partner with our DAs. We bring conduct capability, data and technical know-how and access to a vast network of expertise across the AXA Group. More than anything, we bring a team approach,” he says.