Technological developments such as comparison tools, chatbots and the Internet of Things have made it easier than ever for consumers to research, manage and personalise their insurance cover. Yet digital transformation in the insurance sector has so far failed to reduce broker usage says Robert Kelly, managing director and CEO of Steadfast. 

“Between June 1999 and FY23, the number of individual house and car policies that we sold rose from 4 per cent to 14 per cent of total sales,” he says. “At a time when everybody said the internet would take over and that advice would no longer be required, that hasn’t been the case. In fact, it’s been quite the reverse.”

Philip Kewin, outgoing CEO of Australia’s National Insurance Brokers Association (NIBA), agrees, saying brokers have an important role to play in the insurance ecosystem. 

“As much as technology is fantastic, people are realising they need to get the most value from their premiums, which is something a broker can facilitate,” he says.

“Technology has certainly made it easier to research the different insurance products out there, but I feel this can sometimes complicate matters — giving consumers so much choice that they end up suffering paralysis by analysis. Likewise, insurtech is transforming the claims process, yet managing a claim still requires effort at what is likely a stressful time. With so much going on in the world, brokers offer an invaluable service, helping us mitigate risk, understand how our cover works and avoid (or deal with) unwelcome events.”

It’s a similar story in New Zealand, where clients continue to seek advice from brokers, particularly as changing exposures amplify the pressure to be correctly insured, says Travis Atkinson, general manager of operations at Insurance Advisernet New Zealand. 

“We’ve seen from the volatility of recent years how much clients have relied on their brokers to guide them through challenging circumstances, whether that be relating to economic uncertainty or when faced with loss situations,” he says. “Importantly, where a client is looking to expand and potentially take on more risk, the broker’s role to tailor advice and recommend the best solutions will continue to be valued.”

How to articulate broker value

Although sentiment towards brokers remains strong, with Vero’s SME Insurance Index 2023 revealing high rates of customer satisfaction, there is still opportunity to capture a larger segment of the market, particularly among the 62 per cent of direct buyers considering future broker use.

Sharing quality information with clients, such as risk management advice and new product offerings, is a simple way to communicate value throughout the year, not just at new business or renewal time, advises Atkinson. “Fantastic value continues to come where brokers have strong personal relationships with clients and underwriters,” he says.

In addition, Kewin recommends brokers declare their value proposition on their website or other marketing channels, outlining the benefits they bring as purveyors of professional advice, tailored risk management solutions and claims support. 

“You should articulate the value of what you do, not the products you’re dealing, because clients want to see what you will provide them,” he says.

This could include time and economic savings. Deloitte Access Economics research found brokers save clients an average of 11 hours in selecting and purchasing insurance, which translates to over A$230 million in value for business customers. 

Meanwhile, managing claims on a client’s behalf equates to an average of 2.5 hours saved, alongside the added benefits of alleviated stress and more timely and comprehensive outcomes.

“Brokers offer peace of mind,” says Kewin. “That’s a hard thing to put a value on: working with a professional who knows what sort of cover is important and that the insurance is going to deliver.” 

Communicating fees and commission

Economic and price factors continue to impact insurance-buying behaviour. According to the Vero report, price is increasingly cited as a reason for direct buyers not to use a broker, with 36 per cent claiming it would be more expensive.

The debate around broker commissions and transparency has likewise been an historic barrier to broker uptake.

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