Emerging challenges for insurance brokers in 2019
by Heat Recruitment
by Dave Dewey
From ongoing uncertainty surrounding Brexit to fast-moving trends in digital technology, the road ahead holds a number of challenges for UK insurance brokers. Not only have customer demands changed to reflect a digitally-dependent and increasingly agile society, but a shifting regulatory landscape has given rise to a raft of new products and entrants in the form of insurtech start-ups.
For an industry in which risk is the name of the game, brokers must learn to adapt to an evolving marketplace and capitalise on the opportunities it provides to prevent from trailing behind the competition. While delivering a highly personalised and reliable service to clients will always be an insurance broker’s top priority, the following challenges will see the scope of their role start to shift to meet new market dynamics:
The uncertainty surrounding Brexit
The UK’s withdrawal from the EU has been tumultuous to say the least, and with so little time left and yet so few answers on the terms of our exit, brokers will be forced to implement contingency plans to mitigate risk should we lose trading rights between the EU and the UK.
If clients scale back operations due to difficulties trading with European markets, a no deal Brexit could negatively impact commercial brokers in the short-term. During this period of uncertainty, brokers should work to strengthen client relationships and add value to their service by helping clients to map out their dependence on EU markets and examining alternatives.
The rise of Artificial Intelligence
Robots may not have replaced brokers thus far, but according to data from the CII (Chartered Insurance Institute), 40 percent of account executives at broker level think their jobs are at risk from artificial intelligence (AI) and technological developments. However, if leveraged by insurance brokers in the right way, this cutting-edge technology also offers the opportunity to free up their time and allow for more focus on personalised client management services.
Considering the role of an insurance broker is to assess clients’ coverage needs in order to negotiate the best terms and pricing options with insurers, access to these answers at the click of a button could help brokers to revolutionise the client service by identifying and mitigating risks instantaneously. This sentiment was recently echoed in a recent study by Accenture, who found that 79 percent of insurance executives agreed that AI will revolutionise the way they interact with customers.
Self-insurance and commoditisation
With a growing number of insurance sales taking place online, 2018 saw brokers grapple with the rise of self-insurance and online aggregator sites where consumers can compare insurance premiums and switch from one company to another without the use of a broker.
They may not be able to compete on price, but by keeping costs to a minimum through forward planning, insurance brokers can still contend despite not being the cheapest. Further, brokers should focus their efforts on highlighting the distinguishing advantages of their personalised client service to attract and retain a steady volume of policyholders.
The insurtech revolution
According to a report from Startupbootcamp InsurTech and PwC, there are currently more than 1,300 start-ups from across the world focusing on the insurance industry. Findings from their study further revealed that 75 percent of incumbent insurers “believe the biggest impact to the industry will come from building new products in order to address the changing needs of the customer”.
In 2019, this trend is set to continue in line with the rise in demand for digital insurance platforms that deliver seamless, consistent customer experiences.
On the surface, the surge in innovative competitors doesn’t look good for insurance brokers. However, rather than seeing new start-ups as a threat, brokers should be open to partnerships and integration and embrace the innovation that these technology-lead companies can offer.
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