UK specialty brokers are spending more time solving tomorrow’s risks than placing yesterday’s coverage, but a failure to support their innovation efforts is deepening the global protection gap and threatening economic resilience, according to a new report from the London & International Insurance Brokers’ Association (LIIBA).
The report, The Innovation Imperative: Why Brokers Matter More Than Ever, argues that the insurance market is facing an “innovation gap” - a growing mismatch between the pace of emerging risks and the industry’s ability to develop solutions. Alongside climate volatility, digital dependency, geopolitical instability and the rise of intangible assets, this innovation gap is contributing to a global protection shortfall estimated at $2.5 trillion.
“At its core, this isn’t about uninsurable risks,” said Christopher Croft (pictured), CEO of LIIBA and author of the report. “I really don’t like the term ‘uninsurable’. I believe there are just risks we haven’t worked out how to insure yet. The protection gap is driven by that, and that’s an innovation gap.”
The report highlights brokers as the insurance sector’s de facto research and development function - identifying new risks, building data to make them insurable, aggregating client demand, and helping underwriters develop responsive solutions.
“A quarter of broker time is now spent on innovation,” Croft said. “And hopefully what you’ll see in the report is that we’re trying to get away from talking about cover and products, and instead use phrases like ‘solutions’, because this is more than just flogging someone an annual insurance contract.”
Innovation often begins with a broker identifying a problem no-one has yet solved. Croft pointed to several examples that reflect this dynamic in practice.
With AI-driven data centres, for instance, construction and operational phases often overlap – but the insurance market had treated them as separate. “You bought a construction policy, and then an operational policy, and they were sold by completely different divisions of the same insurer – or more likely, completely different insurers altogether. So there were huge gaps,” Croft said. Brokers helped develop new hybrid coverage to close those gaps.
In other cases, brokers created catastrophe-style risk modelling for offshore wind farms to allow cover against low-wind conditions, and used geospatial data to define safe corridors for grain shipments from Ukraine during wartime.
“Innovation around the broker community is boundless,” Croft said. “It’s based on the problems they’re confronted with.”
Despite their expanding role, brokers still face persistent challenges in being seen as value creators, an issue Croft attributes partly to the industry's inability to articulate its own impact.
“We’re not particularly great at demonstrating our value, especially not on claims advocacy,” he said. “Every broker will swear blind they get better outcomes for their clients, but if you ask them for data, they sort of shuffle their feet and go very quiet.”
Without clear performance benchmarks or data, brokers face pressure to justify fees, and innovation work is often absorbed without recognition, especially under commission-based remuneration models.
“In order to get people to pay a fee, you have to be able to justify it,” Croft said. “The majority of innovation goes on in that relationship between broker and client, and broker and underwriter, where you identify and analyse the risk, then develop a solution. If we don’t invest in that, we’re not going to close the protection gaps that are evident and growing.”
Croft warned that structural and cultural barriers could limit brokers’ ability to keep up with the scale of change.
He called on regulators to distinguish clearly between consumer and commercial business and to take a more proportionate approach to complex risks. “You have to be comfortable with the fact that some insurance vehicles or solutions might not work,” he said. “They seemed like a good idea at the time – turned out they weren’t. But there’s no systemic risk in that. And that’s how innovation works.”
Internationally, licensing rules were also cited as a blocker. “This is a global challenge, and you need to be able to share expertise easily both ways,” Croft said.
The report outlines four key actions to support broker-led innovation:
Croft also called on the UK government to better integrate brokers into its trade and export policy. “We’ve written to government about this,” he said. “In a dream world, they’d go out promoting not just infrastructure projects, but also the risk management expertise that makes those projects insurable and financeable.”
While the report paints a picture of a broker community already stepping up to fill the innovation gap, Croft stressed that time is running short.
“The danger is that, particularly on climate, people disengage,” he said. “But we are an industry of expertise and data. And that data says this is a problem we need to address now.”
He sees the London Market as well positioned to lead, but only if it recognises and supports the innovation that’s already happening.
“Specialty brokers are not just intermediaries; they are architects of solutions to the risks of the future,” Croft said. “London, with its scale, expertise and history of innovation, has a unique opportunity to lead this charge. But progress is not optional. If we fail to act, the innovation gap will widen, the protection gap will grow, and economies will be left more vulnerable.”
