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Peter Harmer, managing director and CEO of IAG, has discussed the firm’s plans to balance out the SME area between intermediated and direct business.
In the second half of 2018, IAG listed the acceleration of its digital transformation, focusing on motor claims and SME direct, as a priority and, speaking after IAG’s half year results announcement last week, Harmer said that the firm is looking to change its mix of intermediated-direct business from 75%-25% in favor of brokers, to a 50-50 split.
“We have made some really good progress; in fact, in the half we actually grew the SME direct book by about $9 million, while our SME intermediated book shrunk by about $2 million,” Harmer said.
Harmer was quick to point out that this split is only an “indication” that the insurer is “beginning to understand how to connect with SMEs” who want to purchase their insurance direct, as the firm looks to the micro-SME market.
“The brokers that we speak to recognise that the play to market here is the micro-end of SME and they are not actually profitable for brokers to serve anyway,” Harmer continued.
Should brokers be worried?
On the surface, the numbers may seem sobering but Harmer said that he has been open with the broking industry, and the need to change its business models since 2010, as the business is not turning its back on the broking market.
“We have been working with a number of brokers over the last number of years and have actually helped them with some marketing tools around LinkedIn, Facebook and Twitter, and so on,” Harmer continued. “We recognise that some customers, at some points in the life of a business, will need more bespoke service and advice than we could ever deliver from a digital, automated solution.”
Harmer said that the firm is working alongside brokers on what a “triage model” for the industry might look like, which would allow direct customers to seek advice.
With disruption a buzzword for both the insurance industry and the general business community alike, Harmer said brokers will not be immune from changes.
“The brokers that I speak to recognise that and realise that they are going to have to change the way advice is packaged and delivered to continue to be relevant in a digital age,” Harmer said. “We remain very open and happy, in fact, to work with any and all of them, to produce better outcomes for our collective customers.”
