The Insurance Broker is dead! Long live the insurance Broker!
Is there still room for insurance brokers in the fast digitalizing world of insurance? Are they the important filter, and closest to your customer, that brings you the right type of business or are they the greedy commission driven sales persons who are more interested in selling products than providing the right solutions for your customers? Independent advice and added value should be their trademark but are they are living up to that expectation?
Moreover, miss-selling practices in countries like the UK and the Netherlands really put the pressure on them. The regulators and insurance companies – driven by the need for transparency- have forced brokers in many cases to go from a commission based model to a fee based model. In the Netherlands, the former market leader Nationale-Nederlanden (part of ING Group) was taken hostage for many decades by the brokers. They were threatened to lose business if they would turn to a multichannel strategy. A few months ago (and many years of back log on this multi channel strategy, later) Nationale –Nederlanden announced its multi channel strategy after all. Is this courage, desperation or the only right thing to do? Of course, the latter and I think it is the only way to go for every financial services company. Too many eBusiness and channel strategy executives out there are still struggling with this important issue and related topics as cannibalism and dual pricing attached to it.
Our research shows that even though internet-savvy Gen Y consumers (ages 24-35) are using multiple touch points in their customer journeys when they research or buy a product, guess what, brokers still remain a valuable part of these journeys but only if they provide added value in the research or sales process.
Self directed customers and changing business models will call for true entrepreneurship and not every broker will survive this. But the ones who remain are probably the ones who are really putting their customer first. So my advice is; nurture them, engage and invest in them. Therefore, successful eBusiness and channel strategy executives of insurance companies could do a couple of things:
First, focus on simplicity and transparency in your product offering and processes because the consumers are asking this already for a long time. Secondly, invest in Business technology solutions that make fast turnaround times for proposals possible for brokers since they like to stay in control of the sales process. Thirdly, use software that guides the sales process and prevent you from miss selling practices. Finally, digitalize the relationship with the broker in general, because brokers like to work digital
For more practical information on how to stay engaged with this important distribution channel please read my new report: “How Will Dutch Insurance Companies Stay Engaged With The Broker Channel After 2012?”
Brokers will remain an important one once you invest in them and, if you do, I am sure they will live happily ever after…….