Lack of capacity and high prices are set to remain key issues for brokers, with no end in sight as difficult circumstances persist and discussions take place remotely, company CEOs told the National Insurance Brokers Association (NIBA) convention today.

Aon Australia CEO James Baum says problems in the hard market are being exacerbated in the COVID environment by an inability to negotiate insurance arrangements face-to-face.

‘“No’ is a much easier conversation on phone or video than it is across the table,” he said. “A really important part of the negotiating experience is being able to spend time together and work through those issues.”

Mr Baum says issues are not just around whether capacity is being offered but the price it is available and businesses operating in challenging economic circumstances are facing tough situations.

“We are actually getting to that stage in some of these negotiations where insurance is actually almost a life and death negotiation,” he said.

“Either it is too expensive and they can’t afford it or we can’t source the capacity an organisation needs to be able to continue to trade. Clearly that is not a space the industry wants to find itself in.”

Gallagher CEO Sarah Lyons says clients who have invested in mitigation and who have a positive claims history are still being challenged on price.

Brokers need to educate clients about the market situation and look at a range of ways to assist such as deductibles, limits and other options, with no early end in sight.

“The hard market is likely to have at least 18-24 months further to run,” she said.

Willis Tower Watson Australasia CEO Simon Weaver says often brokers during tough negotiations have drawn on personal networks, whether through sporting clubs or other meetings, and those opportunities were constrained in current circumstances and with the difficult market likely to continue.

“I don’t see that changing in the next couple of years,” he told the NIBA convention.

CEOs highlighted that the situation provided opportunities for brokers to enhance their position as advisers and to look at alternatives as they assisted their clients through the difficult period.

AUB Group CEO Mike Emmett says it has been frustrating to see good clients with good risks being “lumped in with a broad portfolio view” of risk as insurers appetite has changed rapidly.

“Our clients are seeing significant value from what we do but placing business is very difficult,” he said.

Steadfast CEO Robert Kelly says the hard market has been stable, while not as flexible, and compared to past experience there has been “no stupidity” in terms of firms taking advantage to “grab” gross written premium.