Insight and Intelligence on the London & International Insurance Markets 23 Sep 2017
Who’s afraid of brokers?
- 11 July 2017
Underwriters - are you scared of big bad brokers threatening to cut off your dwindling supply of profitable business if you don't do what they want?
Why not (literally) take a leaf out of Stephen Catlin's book Risk & Reward.
I received a press copy yesterday and have been unable to put it down ever since.
It is an excellent primer on the world of global P&C (re)insurance and is pointedly not an autobiography, but it does contain a huge number of anecdotes from Mr Catlin's remarkable 44-year underwriting career.
The account of Catlin's ascent is disarmingly frank. The back-scratching nature of the pre-1982 Lloyd's Act market is laid bare, with its antediluvian admin and colourful cast of sharks, incompetents and parasites.
But it is Catlin's toughness and self-belief that shines through every page.
When establishing his own managing agent, he recalls Lloyd's brazenly instructing him that to get approval he must bolster his start-up's board with a grandee, with the suggested figure demanding 5 percent equity to sign on.
He doesn't take the old school shakedown lying down and gets someone else to do it at short notice.
After surviving rough treatment by the Lloyd's establishment, he remarks that, despite his business's fledgling size, broker bullying could have no effect.
"If you think you can frighten me after what I have been through, think again," he thinks to himself.
Time and again he puts bad broker behaviour in its place.
Unhappy with the absence of a policy wording after a full year on risk, he sacks an incompetent holding energy broker, quoting the renewal to a direct rival and flying all the way to Asia to speak directly to the client.
It's hard to describe quite how apocalyptic this action was. Lloyd's practice and precedent had given holding brokers historic protection from such actions, even if they were justified.
Catlin just saw dismal service and decided to do something radical about it.
The Asian client was over the moon to finally get the service they had been paying for.
A couple of decades later a broker market commission shakedown at Monte Carlo goes disastrously wrong for the intermediary as Catlin turns the tables on the firm's top brass.
He gets the hapless senior brokers to admit that his business is in fact a preferred carrier because of its good service, strong capitalisation and willingness to pay valid claims, something that he reminds them helps the broker with its E&O exposures.
Since Catlin wasn't being paid for this superior offering, he didn't see why he should pay the additional commission being asked for.
But don't misunderstand Catlin's toughness - he likes good brokers and acknowledges the massive value they bring as his distribution network (as long as no single intermediary holds more that 20 percent of his account!).
As a former broker, I can see that Catlin would have been a tough broke, but I can also see that once his trust was earned he would become a valuable ally and a loyal supporter.
A copy of Risk & Reward should be given to every global wholesale, specialty and reinsurance trainee when they sign up to a career in our market.
You can hear Mr Catlin talking to you directly in his own voice (ably facilitated by his former head of communications Jim Burcke).
I wish I had had such an able companion to my early career. It contains a distillation of real experience that cannot be learned from a CII course.
Reading this would save anyone at least 10 years of hard knocks and fretting over empty broker threats.
Risk & Reward is published by Iskaboo Publishing.
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