How will brokers fit into new online distribution models?

Editor’s Note: This story has been updated to include feedback from the Insurance Corporation of British Columbia.

Brokers will need to determine where they fit in as more consumers move to online and point-of-sale transactions, said Sarah Thompson, chief marketing officer at Hub International.

Just as consumer demographics are changing, so are consumer buying habits, Thompson said Wednesday during The Shifting Role of the Insurance Broker, a session at Reuters Events’ Future of Insurance Canada 2021 conference. And as the sharing economy grows, new insurance products and delivery methods will also emerge.

“As a broker, many of these products are now being transacted at point of sale, so there’s really no need for an intermediary. Or maybe there is,” Thompson said. “As brokers, we need to determine where we fit in as more consumers move to online and point-of-sale transactions. How can we, as brokers, add value into that [supply chain] to do quick online transactions that doesn’t require a lot of advice or thought?”

There’s also a greater desire by consumers to understand what they’re paying for, and consumers want choice and the ability to pay for only those coverages they need and want, Thompson added. That is where the emergence of usage-based insurance comes into play. While some insurers are offering UBI, “that would have been a nice option in the past 18 months during the pandemic, while many of us were at home and had nowhere to go, but were still paying as though we were,” Thompson said.

What is also emerging is the idea that a UBI model will become more dominant as the sharing economy continues. In addition, there is a move from traditional purchases and annual renewals to a subscription-based insurance model, similar to what is offered by Netflix or Spotify.

Sarah Thompson, chief marketing officer at Hub International, speaks during Reuters Event’s Future of Insurance 2021 virtual conference.

“Now, some carriers have already introduced this for personal lines,” Thompson noted. “A consideration for brokers is how we maintain that client relationship through regular touch points. And to ensure that the client notifies us of any change to risk, and that we stay top of mind.”

New lines of business are being sold online — everything from pet insurance, cyber, professional lines to life and voluntary health benefits, Thompson said.

“For many brokers that relied on traditional distribution that haven’t invested in their websites or online offering, the coming years will be extremely impactful,” Thompson said. “We now know that in less than 12 months, [Insurance Corporation of British Columbia’s Autoplan] will be moving to an online distribution model that will further reduce many brokers revenues on top of the already 20-40% reduction in ICBC revenues that B.C. brokers incurred with the Enhanced Care model that launched earlier in 2021.”

Sharon Craver, ICBC’s senior director of insurance operations, disputed Thompson’s statement. “When online Autoplan insurance renewals are introduced in spring of 2022, there will be no difference in compensation for brokers when a customer renews in-person or online. Brokers will be required to review each policy, just as they do currently, to ensure customers have the right coverages.”

Craver added that ICBC is focused on designing an online Autoplan insurance model that will meet the expectations of customers who want the convenience to renew online and be accessible to all brokers regardless of their investment in web services. “Our customers are still going to need advice on insurance, so we’re working to make sure our customers will be able to access services online while still getting support they value from insurance professionals. We will continue to work with the independent broker network of over 900 offices in B.C. when the option to renew Autoplan insurance online launches next year.”

For Thompson, things like open source databanks will also change how brokers negotiate terms for their clients, as the data is readily available through other internal and external data sources.

“Brokers need to find ways to access, analyze, and enhance the value of the data they own going forward,” Thompson said. “For many brokers, the data is stored in PDFs, Excel sheets attached into the broker management system. Unfortunately, that’s just not good enough.

“This might be the brokers biggest challenge as AI and machine learning takes over. Without accessing control of this data, brokers will be hugely disadvantaged and will have to adjust their value add in that distribution channel.”

Feature image via iStock.com/FG Trade