Brokers have “many opportunities” to access new financial services markets as Australia’s population ages, says Zurich Australia CEO Tom Brown.

He told delegates at the National Insurance Brokers Association’s Convention on the Gold Coast last week that brokers should consider adopting a “values-based approach” to regulations they’re already complying with under the Financial Services Reform Act.

He says it is plausible for brokers to move beyond the general insurance market because clients “tend to have a higher level of trust in their broker than their adviser, primarily due to the nature of the relationship”.

“This trust puts brokers in a strong position to expand their financial share of a client,” he said.

Mr Brown says brokers are in the best position to understand their clients’ needs and risk exposures, and there is real potential for expansion in the fee-based risk identification and mitigation market.

“Direct insurers are already actively courting small to medium-sized Australian businesses, and the commoditisation of commercial insurance products will only make their job easier,” he said. 

“By narrowing the scope of advice to one generic wording, some brokers could be inadvertently eroding their perceived ‘value-add’ within this market segment. Exposing their businesses to comparisons based purely on product feature or price may also ultimately favour the interests of direct insurers.”

Mr Brown says the underinsurance problem in Australia could also spell more business for the industry. He says brokers have the opportunity to educate policyholders on the issue, and “get more out of the existing client base”.

He’s also all for a move from commissions to fee-based payment systems for brokers. “Consumers are prepared to pay for various kinds of professional advice – legal and accounting, for example, and they’re making a bucket-load – so why not insurance?

 “A move from commissions to fees would also address the inherent conflict with the manufacturer paying the broker for distribution.”