The insurance battleground does not yet resemble a scene from the 2004 sci-fi thriller I, Robot – but some are concerned it’s heading that way.
Insurtech disruptors and the emergence of direct-to-consumer models are challenging the make-up of the industry and bringing new competition to the insurance battleground.
A key area in which brokers are going to have to fight to stay relevant is the small commercial risk space, according to Seth Rachlin, executive vice president, P&C Insurance Leader at Capgemini.
“The small commercial insurance space is where the real fight is right now,” Rachlin told Insurance Business. “There are scores of insurance companies that are striving to reinvent their sales experience in that area, but they’re up against a number of well-funded start-ups that are trying to create online brokerage for small commercial risks.
“So far, neither the insurtech companies or the few carriers selling commercial risks direct have captured significant market share. But it might not be long before someone cracks the code and figures out a solution.”
The line share of insurtech is focused on personal lines and small commercial risks, which is producing “challenges” for brokers and agents, according to Rachlin. The direct-to-consumer market in the personal lines space is “very real” and the percentage of personal lines business being placed through brokers or agents is declining year over year.
But it’s not all doom and gloom for insurance brokers. Those who work in more specialised areas and deal with complex risks (the so-called stock and trade of the broker) might find insurtech an enabler rather than a disrupter.
“Take blockchain as an example. Some of the early uses of blockchain in the insurance industry have been in the marine insurance space, which is as specialty as you can get,” said Rachlin. “The ability to make the marine insurance transaction far more seamless and efficient with blockchain isn’t going to mean that brokers lose their value.
“It means that the way brokers do business is going to change and become more efficient. I think brokers are going to welcome that positive change because it will improve client experience and will take some operational challenges out of the business. From a specialty and complex risk perspective, I don’t see brokers being disrupted negatively by technology.”
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