Is this the last chapter for the personal lines broker?

The "existential threat" facing brokers is reminiscent of Amazon's fight with bookstores

Is this the last chapter for the personal lines broker?

Insurance News

By Bethan Moorcraft

As any independent bookstore owner will tell you, technological innovation is scary. The rise of Amazon and eBook capabilities left many indies turning their final pages and saying farewell to the chapter of the paperback.

Some might draw the same analogy for the insurance intermediary channel. Tech giants have transformed the way consumers think, interact and shop, and have therefore applied pressure on insurance firms to adapt the way they service customers.

Capgemini and Efma’s 2018 World Insurance Report suggests tech firms like Amazon and Google are disrupting the insurance horizon by providing superior customer service and more digitalized operating models. Consumers are staring to place more value on direct website and mobile app transactions. 

“In almost every insurance market in the world, the direct-to-consumer channel continues to grow,” said Seth Rachlin, executive vice president, P&C Insurance Leader for Capgemini. “That means insurers are recognizing that even if they’ve traditionally been agent or distributor-based, their ultimate survival requires some level of direct engagement or direct selling relationship with the customer.”

“Some carriers will take a consumer to a certain point through a web or mobile interaction before directing them back to the insurance intermediary. But generally speaking, the channel where the insurance transaction is going end-to-end without intermediary involvement is growing in popularity – and that’s an existential threat to the broker.”

But don’t forget – despite Amazon’s emergence, the book shop didn’t die. There are those who will always want to feel the paper as they turn the page in their literary journey, and those who love the musky smell of an old hardback classic. That’s not to say insurance brokers are “old hardback classics,” but they are a resilient bunch who will always hold value. 

Resiliency requires adaptation. The direct model has proven successful in personal lines insurance, which has forced a lot of insurance brokers and agents to shift their focus from personal to commercial lines, where such innovation is still in its infancy. In commercial lines, the amount of business transacted directly to the consumer is still very small, which offers a strong foothold for intermediaries to protect their businesses.

“When you think about the independent agent or broker role, it has traditionally been and always will be about educating and advising a customer about what insurance they need,” Rachlin told Insurance Business. “In commercial lines, the ability to provide that advice and counsel via a web or mobile experience is missing. The broker will always have value in translating the commercial insurance experience and helping people through their limited understanding of insurance and how it works. I think brokers who focus on mid-market commercial and national accounts and larger insurance programs have nothing to worry about.”


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