Insurance brokers are generally optimistic, but for the first time since December 2015, they are expecting a decline in fee commission and premium incomes, a new study reveals.
According to the latest CBI/ PwC financial services survey, robust brokers continue to do well but they are questioning future fee incomes.
“The broking community has so far done a good job of maintaining margins in a tough rating environment,” Bichard says. “However, the fear of fee commissions and premium incomes declining could show that brokers are beginning to question how long this can be sustained for.”
The same survey revealed that insurers and brokers intend to continue investing heavily in IT, including blockchain and emerging technologies, as these bring growth opportunities. They expect to use technology to streamline processes and reduce staff costs, suggesting a continued move towards automation.
General insurers plan to keep spending money on marketing to compete with new market entrants, who do not struggle against the legacy technology systems underpinning the cost pressures of traditional firms.
Life insurers intend to invest heavily in technology over the coming year, pushing towards new, digital products as part of long-term strategic cost-saving initiatives.
“General insurers will have to adapt to the Ogden rate changes… but technology provides them with a great opportunity to get closer to their customers,” said Bichard.
“Life insurers need to continue working to identify their future role in a mature but changing long term savings market and bring truly innovative products to market in what is an increasingly crowded space.”
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