How Insurance Distribution Is Changing
Posted by
Jason Cash on Thu, Feb 02, 2012 @ 01:53 PM
How Insurance Distribution Is Changing
By Andrew G. Simpson | January 26, 2012
Insurance distribution is changing, and agents and brokers—retailers and wholesalers—have to define the value they offer and what type of relationships they will have with carriers and customers in the years ahead.
“Over the last several years, we’ve seen a drastic change in the distribution space, in that the traditional rules have sort of broken down, that the role of a retail agent, the role of a wholesaler, those have all changed,” Glenn Hargrove said in an interview with Insurance Journal. Hargrove is president of MarketScout Wholesale.
“There are no longer circumstances where a surplus lines company is represented just by a wholesale broker or a surplus lines broker. They can go directly to retail agents,” he said. “You have direct line products that are happening within the space that circumvent retailers and wholesalers, in some cases. So it’s changed the value propositions of the firms in that space.” Hargrove believes the changes are being driven in part by regulation and by technology, but another major driver is insurers looking to deliver their products and services in the most efficient manner possible.
There’s the aggregation effect of those people in the distribution chain being able to access a multitude of markets. Or if you look at it in the reverse sense, from the carrier, their ability to deliver to a carrier, a multitude of clients and customers that that carrier probably couldn’t efficiently reach on their own.
Thus agents and brokers bring a combination of expertise, talent and access to the equation. In addition, agents and brokers provide an opportunity for insurers to outsource services.
He said he believes that going forward there will be distribution businesses that are hybrids and some that are much more tailored towards specific operations “but maybe don’t look, necessarily, like the traditional form of either a retailer or a wholesaler as we’ve known it.”
Going forward, distributors are going to have to explain more than that they are in the middle of the equation, but also “why they are there,” he said.
He advises agents and brokers to reshape their own box and own value proposition so that the market is convinced they are an important player in the distribution chain.
Excerpted from: http://www.insurancejournal.com/news/national/2012/01/26/232787.htm For full story please visit Insurance Journal (link above).
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