How to adapt to the digital age
As more insurance brokers work with online systems, there are some risks involved. We speak to Michael Gottlieb of Mega Capital and Marc Chiarella of Colin Biggers & Paisley for their thoughts on the changing role and responsibilities of the broker in the digital age.
Video transcript below:
Donna Sawyer, Insurance Business Online
Donna Sawyer: The internet is nothing new and working with online systems may seem like a no brainer, but there are some risks to be aware of. Marc Chiarella of Colin Biggers & Paisley says it’s vital brokers understand the importance of disclosure especially when using online programs for insurance quotes or underwriting decisions.
Marc Chiarella, Colin Biggers & Paisley
Marc Chiarella: The risks are, they are quite a number. The main one is essentially to understand the scope of the online system. What’s the risk appetite of the insurer? What do they want to transact on that online system? And when setting your own system up, identify the segment and the risk target that you are looking for and make sure you sit down with the insurer and go through all the proper channels to ensure that appetite is being correctly reflected in the online model.
Michael Gottlieb, Mega Capital
Michael Gottlieb: I think it’s important for the insurance industry as an industry to offer solutions to clients around what they are expecting and what they prefer and therefore I think a traditional solution for those clients that value the relationship, the advocacy that a broker provides for them as well the structuring or tailoring of the advice is important. But equally important I think we need to provide a solution for those clients who are looking to research independently and decide on which product they want to go for.
Donna Sawyer: Michael Gottlieb of Mega Capital says brokers looking to expand into the online arena need to carefully consider their business model.
Michael Gottlieb: I think the key thing is to understand your business model and to understand whether you are looking to enter the online space to protect your current client base or whether you are looking to expand. If you are looking to protect your client base, the question is, are you providing value to your client base at the moment because if you are, then that’s probably a client base that requires the advice and the relationship and the advocacy and therefore there is probably very little chance that you will be able to migrate them to a more efficient process online and if you are looking to expand your client base, you really need to understand which client base you are trying to attract.
Donna Sawyer: While the internet allows clients to do their research independently, the role of the broker is still critical in the marketplace.
Marc Chiarella: It is hugely important that because a particular insurer offers a system that is preferential because of its process or you get a high rate of commission from that insurer, you still need to go to the market, you still need to act as a broker. You can’t fall into the trap of saying that you are a broker and actually working under one specific system, because that offers better services and cost efficiencies because essentially could be viewed to be operating under a binder or a facility and that creates a different agency relationship.
Michael Gottlieb: I think it’s very important to understand the limitations of the systems that you are using and really understand the purpose of using an online delivery. And for me the purpose of online delivery is micro businesses with standard insurance requirements. And I think if you use that as a guiding principle then online delivery provides efficiencies for everyone, including the intermediary. It is very important though that I think those clients that require tailored insurance advice, who have complex needs or really require a greater level of disclosure to the insurer or to the underwriter or assisted through the traditional broking relationship and not through an online delivery.
Donna Sawyer: This is Donna Sawyer reporting for Insurance Business Online.