As technology becomes more sophisticated, some critics question whether the broker role will remain viable in a new digital age where automation and digital tools prevail.
One industry leader, however, says that the industry has already attempted such a shift – and the implications that followed were striking.
“Brokers are still going to play the role they’ve always played. They tried to get rid of brokers in England with telephone sales about ten or 15 years ago and the brokerages went out of business, but they were back in six months adjudicating claims,” said Thom Young, CEO, Lundgren & Young Insurance Ltd.
In fact, overreliance on tech tools may also increase the likelihood of legal liability issues as well. This is perhaps best evidenced by the Silicon Valley start-up Zenefits, whose CEO once told Fortune that insurance brokers were all but redundant.
His company, valued at US$4.5 billion, now faces regulatory scrutiny – which could result in substantial fines and jail time - for flouting insurance law and allowing employees to sell policies without a license, according to a new exposé published by Buzzfeed News.
Young points out that selling coverage is only one component of the larger broker experience regardless.
“You may get good rates, but you still need someone to work for you as a representative of the insurance company,” Young said. “The service side of the business isn’t going away and the need isn’t going away just because you let people communicate with you on a new and different device.”
This is not to say that the proliferation of technology won’t have any impact on the market, though.
“Are we going to continue to see 25% commission on property and 12.5% on auto? I don’t know,” Young said, noting that he probably overpays his own home insurance broker because he conducts most of his transactions with the carrier online. “But technology is going to make it easier for us to deal with more clients, not hurt us.”
“The market is what it is,” he said. “As long as the product remains as complicated as it is, and I don’t see that changing anytime soon, there’s always going to be a need for brokers.”
