“Specialty brokers are the connective tissue of the global insurance market. They act as strategic advisers — identifying emerging risks, building the data to make them insurable, aggregating demand for new solutions and uniting diverse sources of capital. In doing so, they translate client needs into workable coverage and make insurance an enabler of growth and resilience” Christopher Croft, CEO, London & International Insurance Brokers’ Association (LIIBA)
Specialty brokers are critical to closing the world’s widening protection gap — the difference between economic losses and insurance protected losses — and enabling the insurance industry to keep pace with emerging risks, according to a new report published by the London & International Insurance Brokers’ Association (LIIBA), in association with Gracechurch and Trimstone Partners.
The Innovation Imperative: Why Brokers Matter More Than Ever warns that the widening protection gap is driven by an “innovation gap” — the mismatch between the speed emerging risks are evolving and the pace at which the market can develop insurance solutions to manage these risks.
Specialty brokers are central to closing this gap, but without stronger support from regulators, government and the wider market, their ability to innovate will be constrained.
The consequences of this innovation gap are already visible. The report identifies four major trends reshaping the global risk landscape: rising digital dependency, intensifying climate volatility, growing geopolitical instability, and the dominance of intangible assets such as data and intellectual property.
Together, these emerging risks are leaving businesses exposed in areas where traditional insurance has failed to keep pace and are contributing to a protection gap shortfall estimated at [1]$2.5 trillion in 2022.
Brokers as the industry’s research and development engine
Specialty brokers, the report argues, are uniquely placed to address this challenge. Far from being merely “distributors of risk”, they are the insurance industry’s research and development (R&D) function — the first to identify emerging risks, aggregate client demand, and build the data frameworks that make cover possible. They also feed lessons from claims back into product design.
The report, which interviewed over 200 senior specialty brokers from around the world, reveals that they now devote a quarter of their time to innovation-related activities — from risk consultation and product design to advanced data modelling — matching the time they spend on placement activities.
Innovation also happens frequently, with 56% of respondents saying they regularly innovate multiple times. This dual focus highlights how central innovation has become to the broker role.
Examples include the creation of cyber insurance products, cover for renewable energy projects, political risk solutions, and supply chain resilience programmes.
In each case, brokers’ close relationship with clients and ability to aggregate and interpret data has been decisive in creating new markets where underwriting capacity alone could not.
Christopher Croft, CEO of LIIBA, and author of the report, said,“This research confirms that specialty brokers are the innovation engine of the insurance industry. They identify risks before they are widely understood, build the data that makes them insurable, and work with clients and underwriters to design solutions that drive resilience and growth. Closing the protection gap, however, requires more than incremental change — it demands a transformation in how risk is understood, mitigated and transferred, with brokers at the centre of that shift.”
“But if we fail to innovate at pace, the consequences are profound: the protection gap will continue to grow, leaving businesses exposed, investment constrained and economies more vulnerable. Closing that gap is not just an insurance issue — it is a matter of economic prosperity,” said Croft
Barriers holding back innovation
While brokers are driving innovation, the report warns that they face structural, regulatory, and cultural barriers that risk constraining their ability to keep pace with the scale of change.
The research reveals that the value brokers bring is still not fully understood — particularly among regulators who are less immersed in the industry, and clients who too often judge them on cost alone. Awareness is also limited within the market itself: 41% of underwriters admitted they understood brokers’ roles only “quite well” or “not very well,” rising to 66% among risk managers.
Croft said: “Specialty brokers are the connective tissue of the global insurance market. They act as strategic advisers — identifying emerging risks, building the data to make them insurable, aggregating demand for new solutions and uniting diverse sources of capital. In doing so, they translate client needs into workable coverage and make insurance an enabler of growth and resilience.”
Despite the central role brokers play, appreciation of their contribution remains weak. Regulators and others outside the industry often overlook the breadth of what brokers do, and this needs to be communicated far more effectively across the value chain if brokers are to secure the support they need to drive innovation and deliver change, Croft noted.
Other barriers include fragmented data, limited capital for new risks, regulatory frameworks designed for consumer markets, and licensing rules that block brokers from deploying expertise globally. Culturally, the industry’s reluctance to experiment and low tolerance for failure continue to stifle progress. And too often, broker remuneration is seen as a distribution cost rather than the investment in R&D it truly represents.
The report also highlights that technology is not being adopted quickly enough to streamline processes and create efficiencies across the insurance value chain. Yet brokers themselves recognise the opportunities it offers: 76% identified improved data and analytics, 75% pointed to better technology, and 62% emphasised greater collaboration as the keys drivers to adding value and driving innovation.
Croft added: “Brokers are driving innovation, but too often their efforts are constrained by outdated regulation, fragmented data and a culture that fears experimentation. Treating broker investment as a cost of distribution rather than the R&D it truly represents only slows progress. Unless these barriers are removed, the innovation gap will widen — but with the right support, brokers can deliver the solutions businesses and economies urgently need.”
A call to action for regulators, insurers and governments
The report urges regulators, insurers and governments to act decisively. Regulators must expand sandbox environments for supervised experimentation and modernise licensing frameworks to allow expertise to flow more freely across borders. Insurers and capital providers should establish dedicated innovation pools to support solutions for emerging risks. Broker investment in analytics, data and product development should be recognised and rewarded as genuine R&D.
The report also calls for cultural change. The industry must adopt lessons from the technology sector by introducing faster feedback loops, modular product design, and greater tolerance for experimentation. Collaboration across the value chain will be essential if the market is to keep pace with a rapidly evolving risk landscape.
London Market’s opportunity to lead
Croft concluded: “Specialty brokers are not just intermediaries; they are architects of solutions to the risks of the future. 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.
“We are calling for regulators, governments, insurers and brokers to work together to break down barriers, empower innovation and collaboration. If we succeed, we will strengthen resilience, unlock investment and ensure London remains the world’s centre of insurance innovation for the decades ahead.”