The Future of the Insurance Broker in a Digital Age
What will be the future of the insurance broker in a digital age? There is nothing certain but the uncertain. Nowadays, we can hardly keep up with all the changes that are taking place at social, technological, economic, environmental and political level.
Everything is affected by the digital age, particularly the insurance industry. The digitization of both our personal and professional lives has an enormous impact on how we perceive traditional risks like illness, car accidents, theft, etc and also brings along a completely new spectrum of potential risks:
- How does one insure a car that is shared by several people in the city?
- Do solar panels on the roofs of residential houses affect the fire insurance?
- Can I insure my genetic data against theft?
- How does one insure a business against cyber attacks?
Radical changes at economic, political and technological level are forcing the insurance industry to call everything into question and to go in search of innovation.
On the one hand, as brokers have always acted as a link between the consumer and the insurance companies, they are perfectly placed to develop new initiatives and to maintain their critical position in the market.
On the other hand, being the middleman, Brokers feel pressure all around. The one thing that disrupters like AirBnB and Uber have in common is that they successfully cut the middleman.
The Driving force behind innovation in Insurance? People!
In essence, every broker’s top priority is to:
- Reach out to as many potential customers as possible
- Recruit new customers
- Retain existing customers
That is the only way to ensure growth. This is and will always remain the case. However, only those brokers who adapt their strategy to reality will manage to survive. And the reality looks like this:
The Reality in Insurance Service
Generation Y and Millenials require a new type of interaction with their broker:
- Online focus
- Do their own research
- Trust the input of social connections and the media
- High degree of self-service
- Expect major human commitment just prior to their final decision and throughout the course of the contract
Generation X and baby boomers:
- Human contact from the start
- Trust input from their close circle
- Expect a paper-based process
The Reality in Insurance Products
The digital aspect also has an impact on how and what we insure:
Nowadays, we insure cars, our lives and our health. With the arrival of ‘Wearables’ and ‘The Internet of Things’, customers will want to ensure their personal data.
The rise of digital marketplaces, such as Uber and AirBnB, is creating a need for a new type of (travel) insurance.
New insight into customers’ lives as a result of social analytics will also help to determine the person’s risk profile. For example, a woman with a broken knee was sentenced for insurance fraud when photos of her skiing were detected on Facebook.
The Reality in Talent Management
As 50% of baby boomers will be retiring from their career as brokers in the next 15 years, the challenge to attract new GenY-talent is greater than ever. A generation that is living with technology, and is constantly in search of new information and knowledge. A generation that is socially highly committed
and wants to be close to people. A generation for whom brokerage has very little appeal. Why would young talent opt for a job as a broker?
Start with Why?
Anyone wanting to attract and retain customers and talent in this reality must first understand the customers and talent.
We Are Social Beings
Prehistoric man lived in a group setting as this was the best way to protect himself from danger. With the support from the group, he dared to take risks. In the past, human beings were under threat from wild animals, and now from financial crises and competitors. We are social beings, because that helps us to survive.
Digitisation means that we have now become even more social than ever. We are in contact with people and companies across the other side of the world, and this 24/7. Social media, cloud and mobile technology strengthen us in what the essence of our existence as social beings is all about. This is why Facebook, for example, has become so successful.
Digital technology supports us in our evolutionary search for people and companies whose visions and values we share, and with whom we wish to be associated. Digitisation is not a hype, because it plugs into the core of our human system. That is why we embrace digital technology. It radically improves our lives. Nowadays, 93% of Flemings own a home computer. Three quarters of them have a profile on social media and 40% of internet users have already purchased goods online. People adapt. Homo digitalis is a fact of life. But what about our businesses?
Homo Digitalis Rules
Recent research by the Altimeter Group into the Anno 2014 status of digital transformation in companies has revealed that most companies are investing in digital initiatives, without really understanding the basics of digital transformation. Only a handful of them realise that it is not about the technology, but about adding value to the life of homo digitalis.
Even for those who do realise it, keeping things relevant is proving difficult. That requires time, money, passion and commitment. One should not act too hastily or without giving the matter due consideration, or just invest ‘because it is something that just has to be done’. The fact is that this evolution is just forging ahead. Anyone who wants to continue to engage with people, would be wise to heed the needs of homo digitalis.
Why a Customer Should Choose You as His Broker
Just ask 10 insurance brokers “What is the purpose of your business?” or “Why should a customer choose you?” There is a big chance that the answer will be as follows:
- We are an independent accredited insurance broker.
- We are easily accessible. · We guarantee superior service.
- We are a registered insurance broker.
- We meet the statutory requirements.
In other words, they tell you what they do and how they do it, but not why they do it. However, research has shown that the latter is exactly why your customers buy your products and services.
The Broker of the Future: Broker and Consultant, Human and Digital
We are supposing that the broker’s internal organisation is both efficient and effective:
- The internal company processes are atomised (100% paperless).
- The organisation is prepared for impending legislation, e.g. MiFID2.
- The performance of the organisation and the workforce are closely monitored. The financial
- results are analysed and are used as the basis for the strategic indicators for the next financial
- The entire workforce is well trained, both in terms of content as in the use of available ICTtools.
In other words, the necessary foundations are in place. The organisation has a stable core and defence strategy. The focus is on attack: the customer.
Please find below the customer process of an insurance broker explained:
A brief survey among friends and acquaintances promptly revealed that there is far too little contact with the broker in the period between the sale and the claim. Some even have reservations about their after-care role. It is, therefore, not surprising that brokers suffer from an image problem. They must go back to the basics: acting as a person of trust and advisor. Someone who can:
- Assist people in choosing the right insurance;
- Provide new information and insight;
- Provide human guidance in the after-care following a claim.
This is, therefore, far removed from the salesperson-image that is attributed to them nowadays. It is with this focus that the broker of the future embraces digital technology: engaging people from beginning to end.
- Improve understanding of the customer
- Explore new digital marketplaces
- Increase customer contact through online channels
- Opt for pro-active contact instead of reactive contact
Of course, the implementation of the digital strategy will also depend on the organisation’s resources and constraints. However, as far as the people focus is concerned, there should never be any compromise on mindset or ambition.
Transform Your Customer into a Hero
The overall aim of a business is to make money, and the only channel for realising this outcome is the paying customer. Of course, a desirable product or service is vital to attract customers, but this will rarely be sufficient to ensure repeat business.
A brief survey among friends and acquaintances made it clear to me that customers of insurance brokers seem to feel neglected. People feel that they are simply a resource and not the main objective.
Customers hardly hear from their insurance brokers as soon as the insurance has been purchased, apart from when the annual premium is due. An analysis of various brokers’ websites has shown that the message conveyed is often along the lines of: work with us because we are faster, more independent, cheaper and better.
Insurance brokers must engage in a dialogue with their customers. This is the only opportunity for you to listen and connect with your customers. Buying insurance from a broker must go beyond the underlying product. The strategy must be determined by human involvement. Only then will brokers be able to fulfill their role as a person of trust and a facilitator of information and insight.
Read also our blog posts:
"Back to the future: What will the next 10 years hold for the insurance industry?"
"What is the Future of Insurance?".
About the author:
Original article is written by Nick Van Langendonck. Nick's mission is to connect people. His goal is to launch and improve digital businesses through innovative ideas created in collaboration with others. He is a positive man driven by humor, creativity and curiosity. See more: hifluence.eu.