Insurance broking is in the midst of a major transformation, with intense competition and digital technology forcing businesses to adapt at a furious pace.

Nobody knows what the future holds, but one thing is for certain – the industry will need the next generation of brokers to see it through safely.

Suncorp’s latest Insurance Insights publication engages young leaders in the debate, giving a voice to the five finalists in the Warren Tickle Memorial Award – the National Insurance Brokers Association’s (NIBA) young professional of the year prize.

Those interviewed were Luke Chrzanowski (Vic/Tas), Account Manager at Tresidder Insurance Group and winner of the award; Amanda Blackburn (NSW/ACT), National Divisional Manager at JLT; Alex Conlon (SA/NT), Senior Account Manager at BJS Insurance Brokers; Bronte Neville (Queensland), Client Executive at Queenscorp Insurance Services; and Luke Pratt (WA), Account Executive at Willis.

Suncorp says five major themes emerged:

• The impact of market consolidation amid high levels of competition;
• Challenges posed by digital consumption habits;
• The impact of automation and technology;
• Professional standing of insurance broking and education standards;
• Merits and weaknesses of fee-for-service and commission models.

The report says profitable growth is proving problematic due to intense competition, and the difficulties will only increase if other international insurers follow Berkshire Hathaway’s lead and stake a claim in the Australian market.

With organic growth a real challenge, many businesses have opted for mergers and acquisitions.

“We are in an age where we’re always striving to achieve a little bit extra,” Mr Chrzanowski said. “We’ll see more mergers and acquisitions take place, purely to try to build profits and top-line performance.”

The appetite for acquisitions at the larger end is likely to put pressure on smaller players, with many finalists predicting some suburban and regional brokers will sell their books and retire.

The shift in consumer buying habits could have a huge impact on broking, with customers increasingly happy to buy insurance direct online.

The five brokers unanimously believe promoting the benefits of brokers is the best way to win back customers.

“We need to make the general public aware of why direct policies are cheaper, because they tend to be entry-level products,” Ms Neville said. “Customers who handle their insurance on their own may not understand which policy is best for their risks.”

One possible strategy is for brokers to provide “low-advice” or “no-advice” policies via online channels, but still provide the traditional level of claims services.

Communication with clients is no longer just about phone calls and emails, with the brokers accepting the customer is king when it comes to preferred methods and frequency of contact.

“A lot of SME clients are time poor, which is why we are looking at better ways for this client base to communicate with us,” Ms Blackburn said. “We are exploring options such as live chats on our website and a direct-quote portal where clients can effectively self-serve, with the peace of mind they have broking and claims support as and when required.

“We must have a facility for these SME customers or they will go elsewhere.”

Digital technology is not just affecting consumer behaviour – it will have a huge impact on the way brokers and insurers go about their business.

The benefits could be huge, but as Mr Conlon says, the transition “hasn’t exactly been smooth”.

“Much of the technology we’re using is still very clunky,” he said. “A lot of people are using iPads these days, but a lot of the applications are very limited in their capacity to actually assist brokers to do their jobs.”

Ms Neville believes technology will make things easier, faster and more efficient, but new platforms must not detract from brokers’ ability to negotiate and communicate with insurers.

And Mr Pratt warns the human touch must never be lost.

“If we’re not careful it’s going to get to the point where we’re effectively box-ticking robots,” he said. “We just really need to manage the impact of technology to ensure that human relationships are not damaged.”

A KPMG survey of global insurance executives suggests the industry is not innovative enough, and the brokers agree.

“People want to insure their Uber cars,” Mr Chrzanowski said. “People want to insure their Airbnb holiday house.

“We need to get on to the front foot more often and look for ways to cover unique risks, obscure risks and emerging risks.”

The broking workforce desperately needs young talent, and the industry’s professional image requires rebuilding.

“We’re not recognised as a profession in the same manner as lawyers or architects,” Ms Blackburn said. “Yet we’re providing professional advice to our clients to help them understand their risk exposures.

“From a very young age, you are told you can be an accountant, you can be a lawyer, you can be a builder. You’re never told you can be an insurance broker.”

Mr Pratt believes the future could be bright if the industry’s image can be revitalised.

“It seems that insurance is almost a secret society,” he said. “It’s a great place to work and there are jobs available. If we get it right, it will catch on like wildfire.”

There are concerns that education and training for brokers is not moving with the times.

Mr Chrzanowski believes a widely available undergraduate degree would be a critical first step, and all finalists agree improvements are needed.

Ms Neville suggests more formal education and accreditation for each individual policy class.

“There’s a lack of policy understanding,” she said. “Before you can provide advice about business pack, for example, you should have to pass a subject on business packs and receive authenticated accreditation. I’d like to see NIBA lead the way in raising these standards.”

The finalists believe broking commission structures will come under increased scrutiny from the Federal Government.

Most see the merits of some kind of fee – but not all think fees should entirely replace commissions.

“Without commissions you’re not going to have the resources to manage a firm,” Mr Conlon said. “The problem with fees, at the moment, is that they are a bit ad hoc – there is no structure behind it.”

Ms Neville and Mr Pratt feel a shift away from commissions would benefit the industry.

“Transparency is an issue – I don’t think a lot of brokers disclose their commissions and income well enough,” Ms Neville said. “It comes from a lack of pride. We should be proud to say we are a fee-for-service industry because we are professionals.

“You don’t question what you pay your doctor, you don’t question what you pay your architect, so why should you question what you pay your broker?”

There can be little doubt the broking profession has reached a crossroads.

The easy option would be to do nothing, the Suncorp report says, but this could spell doom for many brokers.

However, if the award finalists are any indication, the future is in safe hands.

“These fine young professionals not only have grand ideas about the future of the industry, but the passion and resourcefulness to turn their ideas into reality,” the report concludes.