Insurance for the insurance broker

The Belgian insurance industry is going through some turbulent times. So what is the impact on the brokers? And how can they ensure a good future for themselves?

Will the internet soon be providing hospitals and specialised doctors with medical indemnity insurance, one of the most complex and sensitive insurance problems in existence? The answer is no.

Belgian insurance companies have been all over the news in recent weeks, and not in a good way. AXA is cutting 650 jobs by 2020, P&V is cutting 300 jobs and Ethias has shown CEO Bernard Thiry the door.

These news reports are a social disaster for everyone who is closely involved. However, no matter how awful things are, we should not be blind to the reality behind these business decisions: the insurance industry is in for a serious shake-up.

Large investors are lapping up companies that are innovating insurance sales with online technology like never before.

In 2015, no less than 2.65 billion dollars was invested in insurance technology, which is also referred to as Insurtech. The year before ‘only’ 800 million dollars was invested in this type of technology. In the first quarter of 2016, another 650 million dollars was invested in Insurtech start-ups. The remarkable thing is that it is not only venture capitalists (VCs) and private equity companies (PEs) that are investing more and more in digital insurance start-ups – the insurers themselves are doing so as well.

It is clear that the insurance sector is at a tipping point. If large investors are investing billions of dollars in Insurtech, you can be sure that this technology is going to change our sector in a disruptive way.

However, it is not just the industry itself that is changing. Much in the way the big wave of Insurtech investments is a precursor to what is about to happen in the insurance sector, the behaviour of Generation Y and the Millennials – young people born in or after 1984 – is a precursor to what is about to happen in our society. These generations compare just about everything online before buying: shoes, electronic devices, restaurants, music and much more. They also prefer making their purchase online once they have made their decision. This form of consumption has now become a commodity to them thanks to efficient online payment methods and excellent home delivery services.

The success of Dutch website Independer, which currently allows about a million Dutch visitors to compare insurance policies, should not deter us. It should shake us up instead.

The rise of the digital broker

It is written in the stars that simple insurance products such as car or health insurance policies will soon be available online as well. The UK, the US and the Netherlands currently have mature companies selling insurance policies to private individuals as brokers through online distribution channels. Belgium, which is rather traditional in terms of insurance brokerage, does not have any ‘digital brokers’ yet. Yet being the operative word.

However, we are also seeing a rise in digital business insurance brokers. Start-ups in the US and the UK are currently already offering business insurance ‘bundles’ to newly founded companies. They are ‘simple’ policies, such as standard liability insurance.

So is there any future left for conventional brokers after the rise of the digital brokers? I am convinced there is, but conventional brokers themselves are responsible for their own life insurance.

Will we make a difference offering simple insurance policies to consumers or start-up companies alone? I don’t think so.

But I do believe we can make a difference in reducing the complexity of insurance problems. Insurance brokers will act as insurance consultants now more than ever. Advisers rather than salespersons. Instead of offering a product, insurance brokers can offer a guarantee for correct risk assessment, a proper insurance solution and smooth handling of any claims.

Brokers cannot be blind to the changes our sector is going through, but neither should we ignore our own strengths. Will the internet soon be providing hospitals and specialised doctors with medical indemnity insurance, one of the most complex and sensitive insurance problems in existence? The answer is no. The need and demand for knowledge and expertise on complex insurance problems and claim settlements are the lifeblood of insurance brokers. It is up to them to keep showing this to their customers – particularly to the customers and executives of tomorrow – day after day.

Pedro Matthynssens
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