A new era of broking
BMS Re’s Pete Chandler on thriving post Aon-Willis.
By Mark Richardson, London Editor
The merger of Aon and Willis Towers Watson will have a huge impact across the insurance broking industry -- no more so than in the reinsurance sector, where the deal would create a “big two” in terms of market share.
Should regulators approve the deal, the number of broking options might appear limited, particularly if a period of sector consolidation then follows among the smaller challengers to Aon and Guy Carpenter.
Pete Chandler, President and CEO of BMS’ U.S. reinsurance arm, believes consolidation is a possibility in the
near term, particularly while valuations remain attractive to buyers and sellers
alike.
In the longer term, however, he does not see reinsurance buyers losing out because of this.
“There may be consolidation in the near term; however, the aggregate number of reinsurance broking firms might increase over time as clients demand differentiated solutions to age-old risk transfer concerns and start-ups are born to meet the demand,” he notes.
“Ultimately, buyers of reinsurance will benefit as they see continued investment and improvement in analytics, exposure management and risk-evaluation tools, and consultative services from capital management to risk transfer.”
Chandler says BMS Re was already growing long before the Aon-Willis transaction was announced, but that what the deal has done is expand the pool of talent taking an interest in learning about the firm.
Differentiating from the other rival reinsurance brokers will be key if a talent war does break out, and Chandler cites “client advocacy, challenging of the status quo and a one-team culture” in how BMS Re stands out.
“We love to compete,” Chandler adds. “The opportunity to join an organisation where creativity and challenging the status quo are encouraged, thereby professionally allowing colleagues to practice and enhance their individual crafts in a team-centric environment is resonating very positively for BMS around the world.”
The group has experienced a 30% increase in its total U.S. operations head count in the past year, and Chandler reveals plans are on the way for launching new offices.
But along with attracting talent, brokers will need to compete with the “big two” on winning clients.
Access to in-depth levels of data and analytics are becoming increasingly sought after by brokers to demonstrate how they can add value to clients. Combining data expertise was referenced as one of the motivations behind the Aon-Willis mega-deal.
However, Chandler believes BMS Re does have the tools to compete on this level, and says the group has a history of strength when it comes to data and analytics.
The group has been hiring analytical professionals for the last 15 months, including some from larger broking houses, and Chandler says the feedback from them is that BMS has at the least the same, if not better, tools to compete.
“We intend to continue to aggressively invest in all things knowledge-, financial- and product-development related,” he says. “While we don’t have branded boxes of tools like some of our competitors, we do have all of the same components, and we differentiate on application and tailoring to our clients and not shoving their data through a product prism that is not bespoke to them and does not provide solutions to their specific needs.”
The group does not target certain geographies or lines of business for growth, Chandler explains, and instead works with specific clients on their needs.
“If a firm simply wants reinsurance placed on their behalf, then absolutely, they should go find the low-cost provider – that is not our model,” he says. “We also recognise and appreciate that many companies are reliant on certain of our competitors for front-end business – again, not our model.”
Providing “truly bespoke solutions” is what Chandler says BMS thrives on, using its independence to provide advice without concerning itself with how it may or may not impact front-end promises made by retail distribution relationships.
For all brokers, however, the pandemic has tested their relationship with clients and raised questions about how they will behave in the post-COVID-19 market.
Chandler recognises that the pandemic has exposed weaknesses in the policy wordings of some risk carriers, but that COVID-19 has not itself caused the market hardening.
The frequency of catastrophic events in recent years has been a bigger factor in causing the hardening, Chandler believes.
“Is the market hardening? Yes, but it needed to,” Chandler says. “Should reinsurance broking remuneration increase on a straight line basis because of that – especially if we are not doing or delivering anything differently than we had in the prior years?
“At BMS we don’t believe our remuneration should benefit directly from this pandemic," he adds. "We are incredibly transparent and prepared to discuss value, expectations and measurable deliverables when we negotiate our compensation with clients and prospects.”
