From potential issues surrounding Brexit to the rise in artificial intelligence, there are a range of challenges on the horizon for brokers
Insurance brokers are facing significant challenges but their ability to overcome changing market dynamics is unquestioned. To remain successful the ability to evolve their services, business models and client relationships will continue to be key. Here are a few of the challenges facing brokers in 2018 and some possible solutions.
The UK’s withdrawal from the European Union could impact commercial brokers directly if clients scale back their operations as a result of both short-term uncertainty and longer-term difficulties in accessing and trading with European markets.Brokers can add value to client relationships by helping clients in mapping their reliance on European customers and suppliers, and examining alternatives.
The Chartered Insurance Institute (CII) says 81pc of brokers have reported a shortage of technical skills in their business, up from 59pc just two years ago.
Brokers that find a commercial benefit in having well-qualified employees will need to invest in training and supporting wider industry initiatives to increase the take-up of professional learning and qualifications.
Demand to specialise
Specialising differentiates brokers from their competitors and sets them apart as experts in their field. While brokers may be restricting the overall size of their market, they can give themselves a better chance of becoming leaders in a specific space.
Specialising can also help create efficiencies in client acquisition through word of mouth and highly bespoke marketing campaigns. Specialists can also improve client retention, which can provide a platform for generating cross-selling opportunities.
Commoditisation and self-service
Products are becoming more commoditised and encouraging clients to self-serve – but at the same time SMEs are becoming more complex.
Off-the-shelf insurance solutions will not cover all the risks they face, so there is an opportunity for brokers to educate clients about these exposures and give them tailored insurance and risk management advice.
Rise in automation
The CII says 40pc of account executives at brokers think their jobs are at risk from artificial intelligence (AI) and technological developments. But technology also offers the opportunity to free up their time and focus on risk-based client management activities.
Discussing the CII’s findings, its president John Moore said: “Technology, particularly AI, could displace employment across the market. The gap in technical and commercial skills could widen.”
Lack of insurance among SMEs
There were a record 5.5 million private sector businesses at the start of 2016, and the Financial Conduct Authority has found that as many as 40pc of these could be underinsured.
Time and again industry research shows that price is a driving factor for SMEs when buying insurance. This focus on price is exacerbated by continual marketing pushing this angle and increasing commoditisation.
Where brokers can move their relationship to an advisory rather than transactional footing they will stand a better chance of combating underinsurance effectively and ensuring their clients get the level of cover they actually need.
In 2014 just 2.4pc of UK SMEs purchased cyber-insurance, according to Global Data. That jumped to 13.7pc in 2016.
The Department for Culture, Media and Sport said as many as 46pc of customers suffered from a cyber-attack or breach of their computer systems last year, up from 24pc in 2015.
As businesses rely more on IT and the risks they face increase, there is an enormous opportunity for brokers to develop a specialism in this market.
Uncertainty in markets
A constantly changing market demands brokers commit resource to understanding and adapting to unfolding demands. This was emphasised recently when the British Insurance Brokers’ Association announced “Innovate, Evolve, Thrive” as the theme for its 2018 conference.
Organisational change has to become part of the daily conversation for brokers and embedding it in their culture will enable every member of the team to make a positive input.
I watched with interest this morning a feature on BBC breakfast reporting that customers could save up to 70% on their insurance …
31 Oct 2018
Hoddesdon based Ashbourne Insurance was announced as the 2018 ‘Best Customer Service’ company of the year at the prestigious SME Herts Business …
28 Sep 2018
1. Not understanding the different types of home insurance
The first thing to realise is that there are two, very distinct, types of …
6 Sep 2018