What do insurance intermediaries have in common with Apple?

Broking head on what the industry needs to do to survive

What do insurance intermediaries have in common with Apple?

Insurance News

By Lucy Hook

In 2017, many of us use intermediaries on an almost daily basis – though we may not even realise it. From PayPal to Uber, some of the world’s best-known companies come in various forms of intermediaries across different sectors. 

“We all use intermediaries, we all interact with intermediaries, but who an intermediary is today is confusing,” Ed’s group head of broking, Jonathan Prinn, said at the Brokerslink annual conference in Marrakesh last week. 

Technology unquestionably has had an impact on the way companies do business, and indeed the types of companies that can do business, but it has also changed the way that many businesses make money. Apple Pay, for example, is a totally free service, Prinn pointed out.  

“Most intermediaries of the future, and we see lots of this now, won’t make their money through being an intermediary, they’ll make money through other sources,” he commented. 

But what do these changes mean for the intermediaries of the insurance industry? 

“There are huge changes in distribution and huge changes in the overall traditional value chain that we see, and that has to affect the intermediaries of the future,” Prinn explained.  

One of the key areas of change will be driven by clients themselves: “I don’t think there is any question, the power is going to shift in the future to our clients for standardised risks,” the broking chief said.  

“As the world gets more connected, as the world becomes more online, as the pace of change continues to accelerate, then unquestionably, clients are going to understand their risks better, the standard risks such as property and casualty,” he explained. 

The transactional element of an intermediary’s business is becoming less and less important to clients, and, in the future, transactions themselves “will not be the primary driver of a relationship as they were in the past,” according to Prinn. 

“Our role and our world has to evolve into understanding and being able to comment on emerging risks,” he said. “So unquestionably, it’s about analytical expertise and industry expertise, not, ‘Hello, I’m a hull insurance broker, how can I help you with hull insurance?’ but ‘Hi, I work for x company, how can I help you with your risk?’ That has to be a key driver going forward. The client is changing, 

transactional placement is being devalued, so the intermediary of the future has to think about those things.” 
Costs, and driving them down, will be a key element too, he added.  

“We as intermediaries have to start focusing on the costs, on how we can reduce our own costs, and how we can reduce our carriers’ costs,” he said. “We have to do that for the sake of our industry.” 

Related stories:
Brokers’ jobs becoming more “sophisticated” as industry transforms 
Brightside Group CEO: “Digital is the way the world is going”

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