A new report from the London & International Insurance Brokers' Association (LIIBA) has warned that without stronger support for brokers, the world's protection gap, or the difference between economic and insured losses, will continue to grow, leaving economies increasingly exposed to emerging risks.
The study, The Innovation Imperative: Why Brokers Matter More Than Ever, published in association with Gracechurch and Trimstone Partners, argued that specialty brokers are central to closing the gap by driving innovation and developing new insurance products. Yet their contribution, it said, remains undervalued and often misunderstood by regulators, clients and even parts of the insurance market itself.
According to the report, the $2.5 trillion shortfall in global protection is widening as risks evolve faster than the market’s ability to respond. Four key trends are reshaping exposures: greater digital dependency, intensifying climate volatility, rising geopolitical instability, and the growing dominance of intangible assets such as data and intellectual property. These factors are expanding the scope of uninsured risk and exposing the limitations of traditional insurance models.
The research, based on interviews with more than 200 senior specialty brokers worldwide, found that brokers now spend around a quarter of their time on innovation-related work. This matches the time they dedicate to placement activity and underlines their growing role as the insurance sector's de facto research and development function.
Christopher Croft, LIIBA’s chief executive and author of the report, said brokers identify new risks before they are widely understood and build the data that makes them insurable. He said the protection gap cannot be closed through incremental change alone, and warned that failure to innovate at pace would leave businesses exposed, constrain investment and weaken economic resilience.
While brokers are driving much of the industry’s product development, the report pointed to several barriers slowing progress, including fragmented data, limited capital for new risks, outdated regulation, and cultural aversion to experimentation. Nearly two-thirds of underwriters surveyed said they only partly understood the broker’s role, while a significant proportion of risk managers still viewed brokers primarily through a cost lens rather than as partners in innovation.
The report also called for regulators to expand sandbox environments for testing new ideas and to modernise licensing frameworks to allow expertise to flow more freely across borders. It also urged insurers and capital providers to create dedicated innovation pools to fund solutions for emerging risks, while encouraging a shift in mindset to treat broker investment as R&D rather than a distribution expense.
Technology adoption, data integration and collaboration across the value chain were identified as critical enablers. Three-quarters of brokers surveyed cited improved analytics and technology as key to enhancing value and driving innovation.
Croft said London’s market has both the scale and heritage to lead the next phase of insurance innovation, but warned that progress cannot be optional. Without decisive action, he said, the innovation gap will continue to widen, leaving economies more vulnerable to shocks.
With coordinated support from regulators, governments and insurers, brokers could help deliver the next generation of risk solutions and maintain London’s position as a global hub for insurance innovation.
