The risk level facing insurance brokers is rising in the face of technology, an expert has said.
As insurtech continues to develop both in Australia and abroad, brokers continue to face challenges from outside threats in their established markets.
As insurtech continues to draw billions of dollars’ worth of funding from industry players and outside firms, brokers face threats on three fronts, said Sudhir Pai, executive vice president and chief technology officer – financial services at Capgemini.
As direct offerings grow, alongside comparison services and firms that use robo-advice, brokers face a hostile environment.
“I think the risk level is increasing for brokers,” Pai told
Insurance Business.
“If I have an advisory service and I know how to filter it and have direct access, then I’m pretty much covering most of what a broker would do.”
Whilst Capgemini’s recent work alongside the University of Sydney Business School found that the insurance industry should look to partner with start-ups on technology to provide mutual benefits, insurtech growth is expected to be “exponential” Pai continued.
Compared with other technology – fintech and regtech for example – insurtech is working much more closely with traditional industry partners. However, the nature of these partnerships may change.
Pai said that in the future, insurtech firms that have partnered with an insurer may look to white label products outside of their own businesses to service the entire market.
Whilst technology will have an impact on brokers, Pai said that segmentation will be important.
It is not enough to say that insurtech offerings will be exclusively used by younger generations as the rise of tech firms throughout both the insurance industry and the wider financial services show that “there is still a call for convenience and ease and value,” Pai continued.
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