Buckle up for a bumpy ride!

I have written before about the impending hard market in the insurance industry and how this might impact businesses and their insurance premiums. I have to say that this market is well and truly here and we all need to gird our loins for the consequences of this.

This was brought into sharp focus this week when I was unable to source any improvement for an existing client whose insurance premium has risen by 242%!

The fundamental problem lay within the clients sector that has had some issues for some time in the view of the insurers. As a result, the capacity within the market had evaporated and left very little competition for this business. Due to the lack of competition and subject to the old supply and demand maxim, the premium skyrocketed.

Now, I would be happy to be given facts and statistics to undermine my thought that this smacks a little of opportunism.

From the information available to me, the risk to the insurer was unchanged from 12 months ago and the only thing that had changed was the market conditions. Therefore, one could be excused in the feeling that the insurer concerned was simply exploiting the fact that they have no competition, to take more premium.

It's set me thinking to what would happen with a similar situation with a sudden vacuum of capacity in the insurance broking business. If I suddenly woke up and 90% of the U.K.'s insurance brokers had disappeared and I had a long line of potential clients beating down my door to arrange their insurance. How would I deal with this situation?

Fundamentally, I would not start increasing my prices to my existing customers. They have been loyal and supporting and that deserves reciprocal action.

What I probably would do is hand pick a number of the queueing prospects and charge a market rate for these new businesses.

It seems a blight within the financial services sector generally that there is a blinkered drive towards new customers and this very often is at the expense of existing loyal supporters. Surely that's the wrong way round?

Anyway, rant over, and I guess the takeaway is that we are in for a very bumpy ride over the next few years. Buckle up.