Brokers can leverage digital to compete with direct insurers says consultant
Published: May 21, 2019
Updated: May 26, 2019
Author: Luke Jones
CATEGORY: Industry News
Canadian insurance brokers are being told their livelihood is on the line by a potential surge of insurance companies going direct. Indeed, many in the industry believe because large direct insurers have finances, technology, and innovations on their side they can out-compete brokerages.
However, that is not entirely true, and one industry expert says digital transformation is creating a level playing field between brokerages and directs. Andrew Au, co-founder of sales and marketing consultant Intercept Group says brokers can use digital to grow.
“Before, the big companies always had the best technology, they had the best talent, and it was never a fair fight,” he said during a keynote address to brokers at the Insurance Brokers Association of Alberta (IBAA), last week. “But now small businesses have that advantage. Agility is the new currency, so it’s not the big fish that eat the small fish anymore. It’s the fast fish that eat the slow fish.”
Intercept Group is a leading consulting firm that works with Fortune 500 companies and other major organizations. Looking at large insurance direct companies managing change, Au says “it’s never been a better time to be a small or medium-sized business.”
Millennials are increasingly demanding companies embrace technology, such as digital business through the internet. Au says this generation of consumers is driving a new sort of “industrial revolution which will spark a $100-trillion economic window over the next decade. Despite the riches on offer, he says large companies have so far not adapted well to digital.
“Half of the companies on the Fortune 500 List since Year 200 are gone,” he said addressing general trends outside insurance. “They’ve turned over because of digital disruption. Digital transformation is hardest for these largest companies.”
While large companies have floundered in the digital era, smaller companies have got to grips with change and are transforming industries. Au says these organizations are more agile in the market compared to large companies and directs.
“I’ve got a unique vantage point, in that I can see some of the inner workings of a lot of the large financial institutions that are your direct competitors — the direct players in the market,” he said. “And I will tell you that, regardless of all the press releases that you read and hear about, there are a lot of challenges and stalled transformation happening with a lot of the directs.”
“These large vessels are heavily invested and they have legacy IT infrastructure. They know some of the technology that they need to get, but they can’t get it, because it doesn’t integrate with their workflows. They are highly siloed and there is a ton of infighting that’s happening right now; that’s why there is a lot of stalled transformation.”