Schultz defends broker role in prolonged soft market

Paul Schultz, the chief executive of Aon Securities, has hit back at the assertion that brokers are facilitating the continuing soft market by putting their own interests in front of those of their clients and keeping rates suppressed.

He was responding to comments by Jean-Paul Conoscente, senior vice president and chief underwriting officer at SCOR treaty underwriting, who suggested clients are basically happy with existing terms and conditions and it is the brokers pushing for ever-better client deals.

“I definitely don’t think you see that kind of behaviour,” said Schultz. “The brokers are not putting their interests in front of those of the client.”

“I don’t think that any one party is responsible for the way the market behaves,” he added. “Markets tend to be efficient because if capital is priced inefficiently another part will be pricing it rationally.

“Capital providers are making the investment decisions at the end of the day. The role of the broker is to be an advocate for its clients and to achieve the best possible pricing and conditions in the marketplace.”

Schultz added that despite some of the challenges facing the market, opportunities for growth would emerge as certain risks such as terrorism and flood, currently largely backed by governments, are moved into the private sector.

While still in its early stages, the public-private revolution it is a theme that “will be developing in the marketplace in next few years”.

“Some entities that in the past have retained lots of risk will come under pressure to move that risk off their balance sheet. If you can produce innovative solutions that are cost-effective for these types of interests in, for example, less developed countries, that represents a good opportunity,” he said.

In contrast, cyber was a risk that did not offer the same attraction at this moment in time.

“Cyber is an opportunity that needs more research and development but it is a risk that is only going to increase in the future, he said.

“Working out how capital can be best deployed to provide solutions for clients is going to take a lot of thought involving the whole industry.”