Commercial brokers need to rethink strategy to stay relevant
Commercial insurance brokers will need to have evolved into real business advisors for their small and medium-sized (SME) customers by 2027 or face extinction, warns a new report from the Chartered Insurance Institute (CII)’s Insurance Broking Faculty.
The Future of Commercial Insurance Broking report, produced in association with accounting consultancy PKF Littlejohn and broking start-up Konsileo – analyses the present state of the UK’s SME commercial insurance broking market and looks forward ten years to how the market, and those working within it, will need to adapt and change to be both relevant and successful in 2027.
One of the key findings of the report is that the majority of SME customers see their relationship with their insurance broker as a transactional rather than an advisory one and would, in principle, be comfortable buying all or some of their insurance products online in the future. Over half also see their broker only once a year, yet 50 percent said they would be willing to spend more time with a well-informed risk adviser to discuss elements of their business and the risks they face.
The study also shows that 40 percent of account executive and account handlers at broking firms believe their jobs are at risk from artificial intelligence and technological developments. The report’s authors, John Warburton and John Needham, predict that whilst advances in artificial intelligence will automate processes that transfer information between the client and the underwriter, the value-added element of a broker’s role should come to the fore. They suggest that if insurance brokers can see artificial intelligence as a way to free themselves from mundane, time-consuming tasks, focus on work where human input makes a real difference, and embrace lifelong learning, they have a positive future.
However, the report warns of a skills gap that will affect the future of broking if left unaddressed. Currently 81 percent of brokers are aware of a skills gap and the report looks at how traditional broking careers have developed and how these are evolving and the challenges facing both employers and employees. Entry to, and development within, broking as a profession will move toward brokers specialising as a way to differentiate themselves and their services.
John Moore, CII president, commented on the report: “The future of insurance broking lies with individuals developing and maintaining expertise and trusted advisor client relationships.
“This is not to say that the challenges facing brokers are not significant. Further commoditisation of insurance products could lead more clients to self-serve. Technology, particularly Artificial Intelligence, could displace employment across the market. The gap in technical and commercial skills could widen.
“These challenges are real. Nevertheless, the way forward for any individual or firm in the market is to relentlessly focus on clients and to continuously develop skills and technologies to support clients even further. This is the route to a successful and vibrant profession and to creating a future for the people working within broking both today and in the future.”
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