How emerging digital technologies are putting the broker’s role at risk
The future will reward digital insurers, those that adapt to, and embrace, digital transformation. Disruptive technologies continue to disintermediate insurance brokers, whose future relevance is at risk. Brokers are currently facing stagnant business growth and lost revenues as customers seek out value-added services that deliver the transparency and control they need. Brokers would do well to mind these six trends in insurance broking to find ways to adapt and thrive in this changing environment.
Brokers at risk: Digital disruptors, particularly in fintech, are changing the way people interact with insurance brokers. The broker’s role is being displaced by technology that serves customers convenient and personalized offers that are quicker and more accurate than even the most highly experienced broker can manage.
Revenue erosion: Digital improvements and automation are saving customers money in the form of lower intermediary commissions and fees. This could cause broking revenues to decrease by up to 20 percent. Brokers must be looking for ways to combat this decrease through innovation and service changes.
Startups target insurance: New entrants are finding ways to provide the SME (small-to-medium enterprise) market with customized solutions that, in many cases, disintermediate brokers.
Poaching large accounts: Brokers will need to protect and defend their core business from carriers, reinsurers and other farsighted brokers, who are luring accounts with their attractive direct-to-customer services, such as analytics-driven aggregation.
First-mover advantage: In Accenture’s report, “The broker of the future: Winning in a disruptive environment”, 84 percent of surveyed insurance executives agree that traditional organizations must evolve their business before they’re disrupted. Brokers taking the lead in digital transformation are reaping significant rewards.
Platforms beat products: Insurance executives expect platform business models to become a big part of their growth strategies. As brokers look for ways to provide more value to customers, platforms are becoming more vital by increasing efficiencies, risk prevention and scalability.
Insurance brokering will not become obsolete. Customers will continue to seek out brokers’ independent advice. But, if brokers want to remain competitive in a time of stagnating growth, they must respond and adapt to increasing trends caused by digital disruption.