Are the focus areas of UK brokers changing how they trade with insurers and operate in the market?

The results of the latest Deloitte insurance distribution survey offer insight into how brokers are facing challenges within the current economic climate alongside the impact of technology advancements, the need for new skills and the ESG agenda.

Brokers serve a wide range of client markets and industries, differing by business segment, size, risk complexity, and the geographies they operate in. Despite client diversity and needs, the business model at its heart has been relatively stable for some time.

However, changing client needs, technology and data capability advancements, normalisation of new ways of working, or new priorities such as ESG are driving the need to react and evolve. These trends are requiring new propositions, skills, capabilities, solutions and more. As well as brokers, insurers have a key role to play in supporting this evolution.

To help providers better understand the outlook for the model of insurance distribution in the UK market, Deloitte surveyed 351 UK based insurance brokers on their experiences, expectations of change and outlooks on the market..

The research revealed seven key findings on how brokers are reacting to market trends and the economic climate:

1. Brokers are largely focusing on challenges that are here and now rather than longer term trends
Brokers view managing rising insurance premiums as their number one external challenge whilst largely focusing far less on longer term issues such as the ESG agenda and the development of strategic skills.

2. Drivers of placement are finely balanced between price and relationships
For brokers, the key to their role is understanding client needs and finding the most appropriate cover but a number of other factors are influencing placement decisions including broker relationships and proposition design.

3. Hybrid working is here to stay therefore brokers and insurers need to strategically flex/adapt to this.
Despite the traditional model being predicated on significant in-person interaction across many parts of the market, the insurance industry has adopted well to the hybrid working model. For brokers, the transition to hybrid working has been significant and many are maintaining the new norm.

4. Broker technology and the integration to carriers is considered largely not fit for the future
Technology is a key driver of change in the insurance marketplace. From automation to artificial intelligence, digital tools are reshaping industries. However, it seems that many are behind with many brokers citing continuing to rely on outdated, manual processes that are not fit for the future.

5. Brokers recognise the split between technical and relationship skills, but the blend is changing
As the insurance industry continues to digitise, while traditional skills remain crucial there is an increasing demand for digitally native skills, particularly within global brokerages. Brokers must build expertise in automation, AI, machine learning, and data analysis to remain competitive.

6. More fulfilling digital trading potential is on the horizon, and it is approaching fast

The insurance industry has been incrementally building digital trading capability, but recognition is required that brokers and carriers need to collaborate to nurture adoption and to maximise mutual operational and trading efficiencies.

7. ESG is yet to be prioritised at scale by many brokers
Many brokerage staff still consider ESG a minor or longer-term future challenge and are faced with a lack of understanding of the topic, notwithstanding its growing significance in the insurance market

Brokers should assess the balance of tactical and strategic priorities and corresponding investment to gain a competitive advantage in an evolving market.

Insurers should consider how they will collaborate with brokers to support and advise their evolution, provide clarity on their own carrier emerging capabilities and identify synergies.