Consumers all over the world wanted an insurance agent. During the sales process, the power passes from the customer to the insurance company afterwards. In other words, the operators in the field needed a middleman. Then, there were the insurance companies which needed a distribution agent for their insurance products during the sale process. These were the reasons why the world of insurance was based on insurance agents all over the globe. However, this situation now has several threats that are causing a process of change:
Availability of knowledge
Many customers are interested in a professional person who guides them in the process of purchasing insurance and provides with professional service later on. But do those customers want to pay for this assistance and if so — how much then? There is constant pressure from regulation and competition to lower insurance prices and commissions, which leads to a sharp drop in the income of insurance agents. So even if there is a need and desire on the part of customers to work with an insurance agent, they and the insurance companies find it difficult to pay for this service. This means that agents' revenues are already declining and will fall further in the future. It will cause many of them to unite or be acquired by larger agents.
Regulators around the world want to ensure a number of important things, including stability in the insurance industry and a fair and competitive market. A load of directives and requirements and a significant change in the activity of the industry take place. Regulatory pressure remains high, EY confirms. Many regulators in the world do not see the insurance agents and brokers as part of the factors that serve these goals and perhaps vice versa, so regulators actively and partly less directly cause a reality in which insurance agents will find it difficult to operate as it was in the past.
Availability of Knowledge
Professional knowledge and understanding of the work processes in the insurance world are one of the significant tools and assets of the insurance agent in his relationship with the customers. In recent years, however, the impact on the availability of information about insurance is critical because agents lose one of their significant assets. The ability of customers to purchase insurance and even to get services independently is the key element. When the professional information is available to customers on the internet at any time, they feel much confidence to operate without insurance agents. In addition, the ability of customers to compare insurance products offered and prices easily has a great influence on the agents. According to the EY survey, 80% of the customers prefer to use digital and remote channel options already.
Technological Improvements (InsurTech)
Of all of the issues mentioned the InsurTech will have the most impact on insurance agents, since this area disrupts the entire industry, including the activity of agents and brokers. All the issues, such as revenue reduction, regulatory impact, and information availability, will all be exacerbated by the significant entry into the world of technological improvements. There are not only improvements in these operational processes but also a significant change in the mindset of the domain.
“In some areas, insurance agents went away without us noticing it, with the help of contract management apps like Clark. I know that the number of insurance agents in Germany is shrinking every year. This is due to the increase in online shopping,” says Paul MIZEL, founder of an InsurTech startup. “Nevertheless, there are always products that need to be explained and unlike Clark, there’s Insurtech WeFox. It tries to link the product selection and consulting with independent insurance agents, which makes the user journey more personal. I am excited to see which model will develop more successfully on the market.”
The technology will enable customers to be active in the world of insurance without agents and even without insurance companies at all, from purchasing insurance as a group through the simplicity of the products. They will go into underwriting processes and the entire process of claims, of course, where the insurance agent has a very great influence today.
So what is the fate of insurance agents, after all?
“Most of Insurtech companies are acting as a bridge between carriers and end consumers. There are some Insurtech companies in B2B space while others are in B2C. Ultimately, procurement of business still mainly lies with intermediaries,” says Aparajit BHATTACHARYA, the Co-Founder and Managing Partner of the Insurtech project from India.
Ania KUBOW, the co-founder of an insurance company from London considers that “Insurtech goal is to free up agents time of certain tasks to allow for creative problem solving and thinking.”
“Insurance agents will have to transit to an advisory role. Considering how strongly agents are entrenched in the lives of the insured who would have policies across classes of business, you would still need an agent to provide appropriate and timely advice,” Kalpesh DESAI, the President & CEO of Agile Financial Technologies, shares his vision on the role shifting. “The corporate business segment, which still has been relatively untouched by disruptions due to Insurtech initiatives, given the size, value and risk implications, and complexity, are still sourced through brokers and agents who serve large corporates. When InsurTech initiatives seep into these business lines, brokers and agents will wear the mantle of advisors to these channels.”
Concluding this, the insurance industry is facing enormous challenges and changes, which will eventually lead to a significant reduction in the number of insurance agents, their merger into large groups, and their focus on professional and complex niche areas where there are considerable significance and necessity of the insurance agent's professionalism and experience required