A new report from the CII's Insurance Broking Faculty looks forward 10 years to how the market will need to adapt and change to be both relevant and successful in 2027, writes Ant Gould.
The commercial insurance broking sector and its small and medium-sized client base are on the precipice of major change driven by both societal and technical trends. To help members ensure they can meet these challenges, the Insurance Broking Faculty has looked forward 10 years to how the UK SME commercial insurance broking market, and those working within it, will need to adapt and change to remain both relevant and successful in 2027.
One of the key findings of the report -- titled The Future of Commercial Insurance Broking -- is that the majority of small and medium-sized enterprise (SME) customers still 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. More than half of clients also said they only see their broker once a year; yet 50% 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.
WARNING SHOT
Many brokers will of course believe they are already very embedded into their customers' businesses, but the research findings should be seen as a warning to those who are only paying lip service to the wider risk and business advice role. As the report states: "It will become increasingly less tenable for brokers to rely on the transaction-enabler role in the insurance buying chain to provide them with a decent income. Advice will become the 'product' even more than it is today."
As the report's authors -- John Needham, from accountancy consultancy PFK Littlejohn, and John Warburton from broking startup Konsileo, predict, advances in artificial intelligence will automate processes that transfer information between the client and the underwriter, so the value-added element of a broker's role must come to the fore.
"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," says Mr Warburton.
The research looks at the broking market through a number of different lenses -- taking on the views of clients themselves; the relationship brokers have with existing technology and technology providers; and traditional and future development of broking careers and ways of working.
On this latter issue, the report warns of a skills gap -- acknowledged by more than 80% of those surveyed -- that will affect the future of broking if left unaddressed. As the report notes: "Entry to, and development within, broking as a profession will move toward brokers specialising as a way to differentiate themselves and
their services."
Mr Needham adds: "There is considerable scope to further enhance leadership and management at broking firms to attract and retain the best staff, particularly the next generation of talent."
MAINTAINING EXPERTISE
John Moore MBE, Chartered Insurance Institute president and author of the report's foreword, adds: "The future of insurance broking lies with individuals developing and maintaining towering expertise and trusted adviser-client relationships.
"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."
One of the key roles of this report is to help individual brokers understand how the profession is changing and what they can do to equip themselves for the future. But there is also a challenge to broking firms themselves to meet a growing desire for flexibility and virtualisation in working style, more diverse career options and paths and management styles based on collaboration and coaching, with a clearer link between contribution and remuneration.
The Insurance Broking Faculty advisory board, chaired by Stuart Reid, supported this research. The Faculty believes it is a document that -- whether you agree with the findings or not -- should be read, referred to and analysed by all brokers who are serious about their staff, their businesses and their clients.
Ant Gould is director of faculties at the CII
Download The Future of Commercial Insurance Broking report now: www.cii.co.uk/45614