Digital disruption in the insurance distribution space is the biggest concern for insurance intermediaries like insurance brokers and insurance marketing firms globally, says a recent PwC and Centre for the Study of Financial Innovation (CFSI) report titled ‘Insurance Banana Skins 2017’.
Close to 836 insurance practitioners and industry observers from 52 countries across the globe participated in this survey. The report identified various risks concerning the insurance brokers globally pertaining to the insurance industry.
The report says that globally insurance brokers are concerned about their ability to adapt to the emerging technological changes in the insurance distribution space. Insurance intermediaries believe that the innovative technology trends used in insurance distribution and customization of polices would rapidly change the insurance industry.
Another major concern cited by majority of the brokers was cyber risk or cyber-crime after the recent WannaCry ransomware attack. A large number of respondents warned that major attacks on insurers were inevitable, and many added that their impact could be catastrophic.
The survey also found that brokers are concerned about the declining interest rates regime. “Low interest rates are affecting the industry overall by depressing investment returns and ultimately, company profitability, creating a generally riskier environment,” the report stated.
The report also indicated the inability of insurance brokers and intermediaries to retain human talent.
Cafemutual sought the views of a couple of prominent insurance brokers.
Highlighting the major concerns of insurance brokers in India, Kapil Mehta, Secure Now Insurance Broker said, “Firstly, the compensation given to brokers for products like group health insurance is not attractive. Secondly, insurance intermediaries do not have a say in product design. Globally, insurance brokers can negotiate premium rates with insurers.”
Seconding his view, Gurpal Dhingra, Director, Prudent Insurance Broker Co, pointed out that the regulatory headwinds are the key concerns of intermediaries. He said, “The ever-changing regulatory norms make it difficult to carry out business operations. For instance, there were around 37 amendments to the Insurance Act last year. It is difficult to adapt to these changes so quickly.”