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A NEW BREED OF BROKER IS EMERGING
A widening split in the broker sector between ‘traditionalists’ and ‘innovators’ will see competitive pressures intensify on those unwilling or unable to embrace change and look to the future.
This is a key finding of market analysis conducted by the Chartered Insurance Institute’s Faculty of Insurance Broking, in conjunction with Oracle, the world’s largest enterprise software company. Their report, Opinion Leader Research: Broker and Insurer Relations in a Regulated World, assesses the current state of play and looks at the current and evolutionary trends marking out the future of the industry.
The new broker will be more professional, focus on value, use technology as an enabler and take on the role as business continuity advisers, rather than mere insurance providers selling on price. The national brokers, together with some larger regional firms, appear to be evolving in this direction at a much greater rate, opening the prospect of a battle for business using contrasting approaches.
Steve Wellard, CII communications director, said broking firms are at risk of losing ground if they do not embrace change: “There is a wide consensus that brokers need to change their offer and boost the value of what they do by increasing the advice and consultancy element. The larger firms have recognised this, but smaller ones are in danger of falling behind, which will make them vulnerable, especially as direct sellers increasingly encroach on their traditional hunting grounds of commercial lines to the SME market.”
The research also identified a widening split in the way in which regional and national brokers charge for their services. Nationals are much more in favour of full disclosure of fees and commissions, with 47% having already adopted this practice compared to 27% of regional brokers.
Chris Westwood, Head of Insurance, Oracle UK, said the market also needs to focus on technology and overcome its scepticism: “To compete in this increasingly competitive market, insurance companies and brokers need to innovate and be fleet of foot – and outdated legacy technology cannot be allowed to stand in the way. Using technology as an enabler will benefit the industry as a whole, with insurers becoming more efficient and brokers being able to service the needs of clients.”
Steve Wellard added: “We are at a cross-roads. Regulation is clearly a major challenge, but it is those brokers and insurers who are focusing beyond this that are likely to emerge as winners, be that through their people, their infrastructure and the delivery of value.”
The report is available for free download at www.cii.co.uk
The new broker will be more professional, focus on value, use technology as an enabler and take on the role as business continuity advisers, rather than mere insurance providers selling on price. The national brokers, together with some larger regional firms, appear to be evolving in this direction at a much greater rate, opening the prospect of a battle for business using contrasting approaches.
Steve Wellard, CII communications director, said broking firms are at risk of losing ground if they do not embrace change: “There is a wide consensus that brokers need to change their offer and boost the value of what they do by increasing the advice and consultancy element. The larger firms have recognised this, but smaller ones are in danger of falling behind, which will make them vulnerable, especially as direct sellers increasingly encroach on their traditional hunting grounds of commercial lines to the SME market.”
The research also identified a widening split in the way in which regional and national brokers charge for their services. Nationals are much more in favour of full disclosure of fees and commissions, with 47% having already adopted this practice compared to 27% of regional brokers.
Chris Westwood, Head of Insurance, Oracle UK, said the market also needs to focus on technology and overcome its scepticism: “To compete in this increasingly competitive market, insurance companies and brokers need to innovate and be fleet of foot – and outdated legacy technology cannot be allowed to stand in the way. Using technology as an enabler will benefit the industry as a whole, with insurers becoming more efficient and brokers being able to service the needs of clients.”
Steve Wellard added: “We are at a cross-roads. Regulation is clearly a major challenge, but it is those brokers and insurers who are focusing beyond this that are likely to emerge as winners, be that through their people, their infrastructure and the delivery of value.”
The report is available for free download at www.cii.co.uk