Other parts of this series:
- Brokers must quickly prepare themselves for a digital future
- Eight big technology trends that insurance brokers should understand before finalizing their business strategies
- Insurance brokers need to correctly realign their businesses with emerging technology trends
- Six powerful approaches to help brokers find the answers to tough questions about digital disruption
Brokers need to adopt new business strategies to meet the challenges of the rapidly changing insurance industry. To succeed, these strategies must capitalize on the powerful technology trends that will drive this change in the future. Correctly identifying these trends is vital.
Many insurance brokers are having a rough time. They’re being buffeted by a wave of highly disruptive business trends that are fast eroding their traditional markets.
Brokers throughout the world are facing rising customer expectations; growing disintermediation as carriers and insurance newcomers woo purchasers; changing risk mitigation requirements; increasing competition from rivals using sophisticated data analytics; and a surge in alliances between insurers and smart tech firms that could shut them out of new business.
We also estimate that brokers’ revenues from midsized and large customers could shrink by up to 20 percent, driven by two complementary factors. On the one hand, increasing automation and improved risk prediction by customers are likely to reduce their need for insurance. And on the other, automation of the risk placement process in the more commoditized sectors of the market is likely to increase transparency and drive down prices, with commissions and fees following in tandem.
To overcome these challenges, brokers need to adopt radically different business strategies that address the changing demands of the market and harness the potential of digital technologies. Devising such strategies is not easy. Current investments in technology must be managed prudently to ensure that mature and ageing products yield maximum returns over their lifecycles. At the same time emerging technologies, such as the Internet of Things and robotic process automation, and improving technologies, which might include new productivity platforms and big data, will have to be carefully aligned with the business objectives.
Brokers will need to do more than just select the appropriate digital technologies. They must also identify the technology trends that will best support their new business strategies. There’s no shortage of trends currently under discussion. Technologists, analysts and soothsayers are placing bets on all manner of new developments.
We’ve identified eight emerging technology trends we believe will have a big effect on the broking business. They are:
The Internet of Me: Highly personalized digital consumer services are beginning to shape user expectations in business services.
Intelligent Enterprises: Greater data flows from a rising number of sources, coupled with increasingly powerful analytics systems, are enhancing the speed and quality of decision-making within organizations.
Intelligent Automation: The spread of increasingly powerful smart machines is lowering operating costs and improving customer services.
Platform Economies: Technology-driven business platforms are creating new business models and value propositions.
Predictable Disruption: Extensive digital partnerships are providing key insights into future disruption and new business opportunities.
Liquid Workforce: The extensive deployment of digital technologies and services is creating more fluid and flexible workforces with changing needs and expectations.
Digital Trust: Growing data privacy and security concerns require organizations to earn the right to use and share their customers’ data.
Business of Applications: To deliver personalized digital services, organizations need to develop tailored applications that meet specific customer needs and contexts.
These powerful trends will disrupt brokers’ traditional markets and erode current revenue streams. But they’ll also provide brokers with huge opportunities to transform and expand their businesses.
In my next blog post, I’ll discuss how these technology trends are likely to affect brokers. Meanwhile, have a look at these links. I think you’ll find them helpful.
The Broker of the Future: Winning in a Disruptive Environment
Brokers of the future are digitally sophisticated, able to deliver transparency, strategic risk advice and control for today’s customers.