Have Brokers Become Redundant in the Age of Digital Insurance?

digital insurance brokers

Insurance brokers are critical of the opportunities of the digital age. However, personal contact with customers is still desired. An all-clear signal.

Even in the age of digital insurance: Brokers stay relevant

The importance of digital insurance distribution is increasing. For both providers and policyholders, online business offers many advantages, but is also a challenge – because products are complex. Customers often lack the expertise and therefore the self-confidence to conclude a policy themselves. For insurers, it is anything but trivial to design their products in a transparent and customer-centered manner and to communicate them in such a way that they are quickly understood and happily bought.

Until now, brokers have successfully filled the knowledge gap between providers and customers. In the pre-digital era, and in some cases, to date, insurance products have even been geared to the wishes of brokers in order to provide optimal support for sales – as they are the “first customers” for new products. They are irreplaceable when it comes to building trust and explaining the importance of a product to policyholders. Winning them over is, therefore, the first step towards successful sales; the customer comes second.

But will it stay this way? Providers are working to reduce the complexity of their products in order to promote online sales: New cars, for example, are being sold in conjunction with car insurance policies, and price comparison portals on the Internet are sending more and more potential customers to highly specialized websites with the aim of achieving a quick deal. The customer is moving to the fore and is challenging the broker’s position as “first customer”.

What does this development mean for brokers, who, up to now, have been a vital backbone of insurance sales? What role should they play in future when interacting with providers and customers?

Focus on customer requirements

In an interview with AssCompact, Dominik Groenen, founder and CMO of the upcoming provider “flypper”, said: “In our opinion, the orientation, ‘exclusively digital’ bypasses the actual interest of the vast majority of customers.

The insurance world is talking about digitalization and the CEO of a newly founded provider states that “exclusively digital” is not the right approach. And he is right about that. Because from a sales point of view, we are not living in the “digital” age, but in the “customer-centric age”: the focus is on customer wishes, not on technology (which is only a means to an end). According to the current Gothaer digitization study “Versicherung digital 2017”, 81% of those surveyed would like to have a personal contact person.

Meeting customer expectations must, therefore, be done in a variety of ways, not just online. And this is why the first role brokers will play in the future is the same one they have been playing for a long time.

1. Brokers are still needed as intermediaries and consultants

At the same time, digitization provides brokers with a real opportunity to spend more time on their core task: Building trust. As still today, correspondence often takes up a lot of time – e.g. policies, applications, changes have to be checked and sent – the focus will in future be on person-to-person contact. Digitization does not mean people no longer have a task. Rather, tasks are changing with increasing digital transformation. Already to date, many brokers visit their customers with an iPad instead of a leitz folder, because the new sales tools simplify and accelerate individual consultation. “Basically, the activities for the broker will not change,” commented Christopher Leifeld, Managing Director of Gewerbeversicherung24 in an interview with the Versicherungswirtschaft Heute.

Provided that the insurers’ internal processing is also digitalized, the time gained will create room for new tasks. And one of these solves a problem for providers which cannot be tackled simply by digitization.

2. Brokers will in future become designers in the interests of their customers

Insurance providers cannot do without a feedback channel. After all, how can they act in a customer-centric manner if they do not know their customers’ wishes? This is where it makes sense to rely on the large network of brokers. They are in direct contact with the policyholders and know what their wishes (and criticisms!) are. The brokers’ knowledge of customers’ wishes (and not the “brokers’ wishes”) must be incorporated into products and sales.

This role means that brokers will remain part of the development process in the future: Not only will they sell the products, but they will already have had a say in the drafting of offers, and with an even greater focus on the customers than before.

Mutual complementarity: Brokers and online distribution

Brokers, therefore, continue to be an important asset for insurance providers. It is now a matter of moving into the digital future together – and not allowing for competition with online sales. As with the end customers, providers must, therefore, bring the advantages of digitization closer to their brokers.

  • Sales support: A tablet instead of file folders brings speed to the closing process and creates room for other tasks. Of course, this only applies if the processing procedures on the insurer’s side are also digitalized and no “bottleneck” arises.
  • Digital products instead of only digitalized products: The online world is demanding completely new products, and brokers can of course also benefit from their distribution. The “cyber insurance”, for example, against hacker attacks, is an example of this. But: If you want to sell them, you had better leave the leitz folder in your office and rely on digital sales support.
  • Customer-oriented products: Brokers are the best feedback channel for providers because no one else is so close to the customer. This is essential in our customer-centered age; also, because customers desire personal service. It’s a win-win situation for all partners: insurers, customers and brokers.

Even though their tasks will change: there is still a lot to be done by brokers. Replacing them with websites, apps and artificial intelligence is a risk – because the digital transformation could quickly lead to a dead-end from which providers would have difficulty getting out of again: They would then become pure service providers of price comparison portals, lose direct contact with their customers and have to follow development instead of determining it.

On their way through the “labyrinth of digitalization”, insurance companies should therefore not only take their brokers with them, but also involve them increasingly in decision-making. After all, brokers can help them find the right path and not lose sight of customer wishes. The “customer-centric age” demands that they continue to be regarded as the “first customers” for new products.

Learn more about the opportunities and challenges that the digital transformation offers established insurers. We have compiled the most important topics in a comprehensive overview on digital insurance for you, from customer proximity to new technology.

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