14 April 2015 Insurance

Brokers essential to industry but tech could change this

Most insurance executives believe there will always be a space for brokers in the industry although a meaningful proportion also think that technology could displace their role in the future.

More than 85 percent of respondents affirmed that they believe brokers will always have a place in the market, when surveyed by Intelligent Insurer. The question was prompted by comments made by Stephen Hester, the group chief executive of RSA, who said in a speech that insurance carriers had allowed space for brokers at their own expense.

Many respondents argued that brokers play a valuable role in matching buyers and sellers for more complex transactions.

“The larger and more complex risks need unravelling and brokers are best suited to this skill. The cost to insurers to have a similar resource and suitable marketing would exceed the remuneration that is currently paid to the broker,” said one respondent.

Another added that for more complex risks, businesses need independent advice. However, they questioned whether brokers were truly independent any more.

A number of respondents were offended that this question had even been asked, believing that brokers are an essential part of the industry.

“Brokers will always have a place as long as insurers don’t deal fairly and honourably with their commitments,” said one.  Another added: “Quite simply, if the broker channel was not providing value it would be declining precipitously already or gone. There is no evidence of this happening.”

However, a perhaps significant 15 percent of respondents said they believe the market could learn to live without brokers, arguing that clients may cease to see the value in paying an intermediary as technology continues to advance at an ever increasing pace.

Click here to answer Intelligent Insurer’s latest question: Was Endurance's acquisition of Montpelier Re the right move for both firms or a case of second choice for Endurance after it failed to purchase Aspen last year?


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