The widespread myth that Canadian insurance brokers will soon be displaced in the distribution chain by technology and robots has been busted.
Brokers really are a resilient bunch. Over the past few years, they’ve been battered with curveballs from industry aggregators, agile insurtechs and changeable consumers – and new threats to the intermediary channel keep cropping up daily.
Despite all this disruptive noise, the Canadian broker force remains as relevant as ever. In KPMG’s 5th annual Canadian insurance industry opportunities & risks report released earlier this month, survey respondents cited “focusing on brokers/intermediaries and their needs” as one of the top business opportunities for their organization moving forwards.
“The Canadian insurance industry is heavily dependent upon insurance brokers. The myth that brokers will be crossed out of the value chain is simply not true,” said Johannes Pastor, National Sector Leader, Insurance, KPMG in Canada. “However, the insurance industry is being redefined by rapid advances in technology, competition and shifting consumer preferences. Brokers are under pressure to redefine their value proposition in the supply chain for consumers and insurers alike.”
What does this redefined value proposition look like? Put simply – it’s extremely customer-centric.
The evolution of direct-to-consumer and self-service insurance models is forcing brokers and carriers to find new ways to connect with and provide value for consumers. This might mean harnessing the power of big data capabilities to provide more bespoke products and services, or investing in new technology to enhance operational processes and create a more streamlined, secure and satisfying customer experience.
“Canadian consumers value the broker’s role in the insurance transaction. It’s a fundamental part of the industry and it differentiates Canada from other parts of the world, where we’re seeing a much greater presence of insurance aggregators,” commented Stephen Smith, Partner, Audit, Financial Services, KPMG in Canada. “Canada remains a unique insurance market, so it will continue to have different trends and priorities with regards to technological advancements. Only time will tell how brokers will adapt to digital trends and to growing consumer demands for a 24/7 service.”
The KPMG survey found that customer acquisition and retention remain top of mind issues for the Canadian insurance industry. The post-survey report summarizes that evolving customer expectations present both challenges and opportunities for the insurance community. On the one hand, they’re driving investment and innovation, but on the other, they’re pressurising an industry beholden to strict regulations and legacy operations.
A slight uptick in optimism - with 27% of survey respondents telling KPMG they are “somewhat more optimistic” and 8% claiming to be “significantly more optimistic” about their organization compared to this time last year – suggests Canadian insurers and brokers are getting to grips with transformational trends and emerging customer-centric strategic priorities, Smith told Insurance Business.
“I think there’s going to be a lot of change from an overall market standpoint in 2018 – a lot of which will centre around enhancing the overall customer experience,” Smith added. “The threat to brokers is very real, but there’s also enormous opportunity for them to reinforce their value, and think outside the box in terms of how they interact with customers.”