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Insurance Business | 26 Nov 2015, 09:05 AM Agree 0
In his first major public appearance since taking the role of CEO of one of Australia’s largest insurers, this industry leader warned that more disruption could be on the way for the industry which will be of particular note for brokers.
  • Robert Kelly | 26 Nov 2015, 11:05 AM Agree 0
    Talk to the people at the Coal Face about advice vrs price
    If the Intermediary cannot demonstrate their value to the process then they will not continue to be used by the consumer
    However the consumer who is a price buyer is not necessarily core to intermediated client base
    Distribution will change and leverage technology to meet consumer demand
  • John | 26 Nov 2015, 11:19 AM Agree 0
    Yet another article about disruption without any real meaning.

    Mr Harmer is correct that SME is the heartland of IAG, therefore he has plenty to be worried about. As a large insurer that is trying to be all things to all people, they don't have any point of difference & certainly don't appeal to the trendy new aged people he mentions.

    A reversion to truer pooled risk & massive blanket policies are a huge threat to traditional insurers. Potentially tens of thousands of insureds some of whom previously took an individual policy are now covered by an umbrella policy & thus those individual policies will lapse & those other people who were previously uninsured represent a further lost opportunity.

    This is bad news for brokers who would have intermediated some of these lost policies. It is worse news for insurers who have lost all of the policies. The insurer or insurers writing the umbrella policy still have a client & whilst the combined limit equates to less aggregate capacity so too is the premium a lot less than the combined individual policies would have been.

    The extent of this varies between different platforms, for Uber, people will have to insure their car anyway but for Airtasker it is a real possibility that people no longer need their own insurance policy. But there also exists a possibility that another social media platform could emerge & extend a blanket policy further still.

    A variation on this theme also applies to occupation & association specific schemes. No one seems to have mentioned this as a type of disruption but it can also serve to reduce premiums by either using a master policy or general bulk discounts.

    Our schemes keep growing as more people become aware of them & conversely, we reguarly lose clients to different schemes offered by other brokers. For example, some of the associations have PI available as part of a master policy for between $100 & $300. The master policy might cost $100,000 base for a 1000 member association but 1000 individual policies would cost at least $500,000.

    Again, this is good news for the insurer writing the scheme but bad news for the others. These arrangements are mostly broker driven & I believe will remain so, I don't see insurers being well placed to run these things directly.

    Furthermore, why do people keep talking about brokers being removed as a link in the chain. For PI, PL, ML etc it is just as possible to cut out an Australian insurer altogether. It is easier than ever for a broker to deal with an underwriting agency or even a Lloyd's broker directly.

    Property is the only reason that brokers absolutely need Australian insurers. But in the SME space the concept of an office is changing such that many SMEs rarely insure anything beyond PL & PI. I think that there is a real chance that Australian insurers end up writing domestic & large policies only.
  • John | 04 Mar 2016, 03:02 PM Agree 0
    The issue for some appears to be advice v price. It is really an issue of advice AND price (and speed and convenience and quality and lots of other factors). Price is always a factor and always will be. We all remember the 4Ps in marketing?
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