Among these changes:
- Profit Optimization
- Regulation
- Information Accessibility
- Technological Improvements
Profit optimization
Many clients are interested in a professional who can help in the process of purchasing insurance and provide professional service after purchasing it. But are clients willing to pay for this help? And if so, how much? A constant pressure from regulation and competition lead to lower insurance prices and commission reduction, followed by a sharp drop in agent revenues. Therefore, even if there is a need and desire on the part of clients to engage an insurance agent, they and insurance companies do not particularly want to pay for this service. This means that agent revenues are already falling and will continue to fall in the future. This will force many of them to unite or come under the control of larger players.
Regulation
Regulators around the world want to ensure stability and fairness in the insurance industry, as well as healthy competition in the market. However, we are seeing an increase in directives and requirements. Regulatory pressure remains high, confirms EY. Many regulators in the world do not perceive insurance agents and brokers as factors serving their purposes. Perhaps, on the contrary, regulators create such conditions under which it will be difficult for insurance agents to work the way they are used to.
Information Accessibility
Professional knowledge and understanding of work processes in the insurance world are important tools and assets of an insurance agent in his relations with customers. However, in recent years, the insurance information accessibility has increased, which means that agents may lose one of their significant assets. The ability of customers to purchase insurance and even receive services on their own is a key task for the industry in the near future. When information becomes available on the Internet, customers believe that they have the full knowledge. They have the opportunity to easily compare the offered insurance products and prices, and this certainly affects the agent activity. According to the EY survey, 80% of customers prefer to resort to digital methods of transactions.
Technological Improvements
Insurtech will have the greatest impact on insurance agents, since this system destroys the entire industry, including the agent and broker activities. Such issues as declining revenues, the impact on regulation and information accessibility will be exacerbated by new technological advances. Improvements occur not only in operational processes, but also in the functioning of the entire market and businesses as a whole.
“In some areas of insurance, agents have quietly retired, replaced by applications like Clark. I know that in Germany the number of insurance agents is dwindling every day, due to the fact that the number of online purchases is increasing,” says Paul MIZEL, the founder of the insurtech startup. - However, there are always products that need a detailed explanation, and besides Clark, there is also Insurtech WeFox. This service finds independent insurance agents for advice on the purchase of a particular product. This is an individual approach to the user. I am confident that such a service will successfully develop in the market.”
Technology will allow the customers feel confident in the world of insurance without mediation of agents and even insurance companies. Over time, they will take on the role of underwriters, as well as all the work with the claims. The role of agents will only be decreasing.
So what is the future fate of insurance agents?
“Most foreign insurance companies are still serving as intermediaries between insurers and end consumers. There are several companies in the B2B field, others are in B2C. Ultimately, business development continues to be largely driven by intermediaries,” says Aparajeet BHATTACHARYA, co-founder and managing partner of an insurtech project from India.
Anya KUBOV, co-founder of an insurance company from London, believes that “the goal of insurtech is to release agents from certain tasks in order to allow creative thinking and creative problem-solving to be free.”
“Insurance agents will have to become consultants. Given their important role for the insured person, one way or another, an agent will be needed to provide an appropriate and timely advice,” said Kalpesh DESAI, President and CEO of Agile Financial Technologies. - The corporate business segment, which has been relatively intact, still operates through intermediaries and agents. It is necessary to take into account the size, cost of risk and complexity of operations, and agents just serve large corporations. As new insurtech initiatives flow into these business areas, brokers and agents will soon be retrained as consultants.”
In summary, we can conclude that the insurance industry is facing enormous problems and changes, which ultimately will lead to a significant reduction in the number of insurance agents, merging them into large groups and focusing on difficult niches with need for agency professionalism and experience.
Photos: syl.ru
