I have been there for 22 years. I had one of the largest successful companies in the field that i founded, I understand and know the world of insurance agents and brokers from within. All that is written in the following chapters stems from my experience over the years as a professional who came from the old industry to the new one
Is only the innovation and technology causing the changing or are there other factors that influence?
Consumers all over the world want an insurance agent. The world of insurance is a very complex world that requires knowledge, specialization and understanding. The power passes from the customer during the sales process to the insurance company afterwards. In other words, the operators in the field need a middle man. The insurance companies need a distribution agent for their insurance products during the sale process, and the customers need a professional service afterwards.
This is reason that the world of insurance is based on insurance agents all over the globe However, this situation now has several threats that are causing a process of change:
- Availability of knowledge
- Technological improvements (InsurTech)
The first reason is profit – there is no doubt that many customers are interested in a professional person who will guide them in the process of purchasing insurance and will provide them with professional service later on. But do those customers want to pay for this service and if so how much. In addition, there is constant pressure from regulation and competition to lower insurance prices and commissions, which leads to a sharp drop in the income of insurance agents. So even if there is a need and desire on the part of customers to work with an insurance agent they and the insurance companies find it difficult to pay for this service. This means that agents’ revenues are already declining and will fall further in the future, which will cause many of them to unite or be acquired by larger agents, or even worse. This is the first reason that insurance brokers in the world over the next decade will disappear from the market
The second reason is regulation. Regulators around the world want to ensure a number of important things, including stability in the insurance industry, and especially insurance companies, a fair and competitive market. Many regulators in the world do not see the insurance agents and brokers as part of the factors that serve these goals and perhaps vice versa, so regulators in the world actively and partly less directly cause a reality in which insurance agents will find it difficult to operate as in the past. A load of directives and requirements, and a significant change in the activity of the industry. Like many regulators, technology is seen as a means to achieve these goals. In the next chapter I will discuss this issue and see its effect on insurance agents and brokers
Availability of knowledge – Professional knowledge and understanding of the work processes in the insurance world are one of the significant tools and assets of the insurance agent in his relationship with his customers. Most customers work with insurance agents for these reasons. In the recent years, information has been available, not only in the area of insurance, but the impact on the availability of information about insurance is critical because agents lose one of their significant assets. The ability of customers to purchase insurance and even to get services independently. When the professional information is available to customers on the internet at any time they feel much confidence to operate without insurance agents. In addition to the fact that the information is available leads to the ability of customers to compare insurance products offered to them and to compare prices easily, these factors have a great influence on the agents
Technological improvements (InsurTech) – However, all of the issues that I have mentioned that will have the most impact on insurance agents is the InsurTech, since this area disrupts the entire industry, including insurance companies and customers, and, of course, the activity of agents and brokers. All the issues I mentioned, such as revenue reduction, regulatory impact, and information availability will all be exacerbated by the significant entry into the world of technological improvements. I do not mention only improvements in these operational processes and a significant change in the mindset of the domain. The technology will enable customers to be active in the world of insurance without agents and even in the future without insurance companies at all from purchasing insurance as a group through the simplicity of the products going into underwriting processes and of course the entire process of claims that the insurance agent today has a very great influence
The insurance industry is facing enormous challenges and changes, which will eventually lead to a significant reduction in the number of insurance agents, their merger into large groups, and their focus on professional and complex niche areas where there are considerable significance and necessity to inform the insurance agent’s professional and experience. Just look at what technology and innovation has done to the world of travel agents and how the streaming technology for Blockbuster