Caught in the middle: The role of insurance intermediaries in the digital era

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The rise of digital platforms in the insurance industry has brokers and agents anxious about their future. As digital continues to transform insurance, what will the role of insurance intermediaries will be?

Through digital platforms, insurers can educate, engage with, and even sell directly to customers. Although all-digital transactions comprise only a small fraction of the total policies sold, the growth of this channel represents a massive change for the industry.

What does it mean for agents and brokers working with customers in the traditional analog world of insurance? Will they continue to play a central role, or be left out in the cold?

The evolving role of insurance intermediaries

The insurance industry is under enormous pressure as the digital era forces insurers to transform their old ways of doing business. Changing those entrenched processes is no small feat for an industry with ancient roots.

Today’s customers expect speed and convenience when they do business with a company, whether they’re ordering groceries or buying a policy. Many expect a completely digital experience.

Many wonder where this leaves brokers, independent insurance specialists who legally represent the buyer, and agents, who represent insurance companies and sell policies to customers.

Here’s what some top experts have to say:

  1. The risk of disintermediation is real
  2. Insurers need to provide a seamless combination of digital and human touch points
  3. Brokers and agents must focus on providing added value

Industry Experts on the Role of Insurance Intermediaries in the Digital Era

A panel of insurance industry thought leaders convened to discuss how agents and brokers can remain relevant. You can watch a replay HERE.

Changing times bring challenges

According to Stefan Mueller, SAP’s Director of Insurance and Financial Services Industries, the role of insurance intermediaries was challenging even before the digital revolution.

Agents and brokers must have a thorough knowledge of an industry that’s both highly complex and highly regulated. In addition, they’re expected to play an advisory role for customers, making recommendations based on life changes and other specific needs.

Now, Mueller points out, brokers and advisors are trying to adapt to the new digital landscape – but it can be a daunting task. For one thing, based on their experiences in industries like retail, many customers believe that everything insurance related can be handled in an entirely digital manner.

It falls to intermediaries to temper these often unrealistic expectations. Moreover, today’s customers are armed with wealth of information about policy options and competitors’ rates. For agents and brokers, there’s a very real threat of disintermediation.

The role of insurance intermediaries: Bridging the gap

As Sven Roehl, founder of Toronto-based Cookhouse Labs, points out, that’s one reason intermediaries are resistant when insurance products and services are made available directly on the web.

Not only does it seemingly undercut their role, but customers who make insurance purchases directly from a website still expect the type of personalized service that an agent would traditionally deliver.

All of this points to the need for insurance companies to engineer processes that seamlessly combine digital and human touchpoints based on the needs and wants of individual customers.

There are active steps intermediaries can take to ensure that they remain vital to the process. Peter Maas, Professor of Management at University of St. Gallen, asserts that insurance brokers and agents have a much-needed role to play in helping translate the complexity of the industry to often-confused customers.

What’s more, they inject an element of transparency to a process that can otherwise seem governed by policy fine print. But Maas cautions that intermediaries need to demonstrate their value more strongly lest they be perceived – by insurers as well as customers – as just another added cost.

In the end, agents and brokers are quite often the face of the insurance industry as well as the “last mile” between the company and the customer.

For this reason, they are likely to remain a crucial part of the insurance industry, but only if they remain focused, knowledgeable, and highly motivated to add value throughout the process.

What’s the global impact of COVID-19 been on the insurance industry?
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James Eardley

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