Asia needs ‘challenger brokers’ to disrupt status quo: Price Forbes

In Asia’s re/insurance market, which is poised for substantial growth yet starved of competition in some areas, “challenger brokers” are emerging as the real disruptors. That’s the view of Phil Johnson, chief executive officer of Price Forbes Asia, who argues that a fresh wave of competition will shake up the current landscape in which, he claims, the two dominant brokers hold more than 40 percent of the developed Asia-Pacific market.

“Asia-Pacific is the fastest-growing insurance market in the world, but it’s also a market in which there is the least choice,” Johnson told SIRC Today. “This presents a chance for challenger brokers such as Price Forbes to disrupt the status quo and drive innovation in the market.

“Specialists and creative thinkers who value integrity and independence don’t have a great deal of choice of who to work for.”

Johnson emphasised that the Asia-Pacific market will benefit greatly from having more choice and more international brokers coming into the market. While he is confident in the market’s trajectory, he predicts that only brokers equipped with digital prowess and strategic scale will thrive.

“It is estimated that by 2032 the Asia-Pacific market will be the largest in the world and consequently will have an increasingly meaningful impact on the global re/insurance landscape,” Johnson said.

“I expect that brokers will continue to evolve towards being digital, and that consequently many of the smaller brokers will no longer be able to compete with the solutions that larger brokers such as Price Forbes can provide,” he added. This will enable more choice for clients and attract more international players to enter the Asian market, he explained.

Aggressive growth

Price Forbes has what Johnson describes as “explosive growth plans” in the Asia-Pacific market. Johnson’s strategy: disrupt, innovate, and grow. Since Johnson took the reins in January, the firm has doubled its local office size, hiring 25 specialists across an array of sectors from marine to renewable energy. “Our goal is to be the pre-eminent risk and insurance specialist in Asia,” he explained.

“We’re bringing in top talent to support our existing team and drive growth.”

“Singapore is one of our core markets in Asia. But what makes doing business in Asia so exciting is that it’s a vibrant dynamic market with different challenges and opportunities in every country,” he said.

The company is betting on reinsurance expansion, planning to strengthen its facultative team in property, energy, and casualty. “We’re bringing in top talent to support our existing team and drive growth,” he said, adding that what gives Price Forbes an edge is the overarching strength of the Ardonagh Group, its owner.

The company is expanding geographically and also digitally. “I’m passionate about embracing and harnessing new technology such as artificial intelligence and machine learning so that we as an industry continue to innovate to create new solutions to help close the $3 trillion uninsured protection gap,” Johnson said, noting that Price Forbes is “investing significantly in technology to transform ourselves into a fully digitally enabled broker”.

“Digitally-enabled loss mitigation alerts are a risk management tool that can help clients reduce their risk in real time and receive premium savings for doing so,” Johnson said.

A balancing act

Johnson sees “soft market conditions” becoming more prevalent in Asia-Pacific, but he noted that, “fortunately this is being offset by Asia’s economic growth and increased insurance penetration”.

“Market conditions are currently positive for clients,” he said, adding that rate movement, from a reinsurance perspective, is expected to stabilise and be “fairly flat” at 1/1 renewals.

"On the treaty side, we are seeing record levels of alternative capacity into the market, but despite strong results over the past few years and a relatively benign cat year, the reduction in global interest rates and the corresponding impact on investment returns means we expect 1/1 to be a relatively flat renewal period,” he explained.

“On the facultative side, increased capacity is leading to reductions across programmes.

“In terms of retentions, we expect to see increased pressure to bring these down and local insurers making greater use of their treaties and offering broader limits,” Johnson added.

“We expect coverage will remain broadly consistent, albeit a few new exposures such as PFAS may start to be excluded on more casualty programmes, and we expect to continue to see an increased uptick in cyber purchasing throughout Asia.

“The Asia-Pacific market is brimming with opportunities, but they present challenges that require a balancing act between global scale and local expertise,” he concluded.

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