Brokers need to switch from being transaction-driven to advice-driven, according to CGU CEO Peter Harmer.

“The biggest threat to broking comes from within,” he told last week’s Steadfast convention. “The broking profession is actively shrinking its own market.”

Mr Harmer says the “transaction-driven mindset” of brokers has created a focus on maximising margins and reducing touch points, while driving commoditisation and standardisation.

High commissions, volume bonuses, profit shares and marketing fees are creating unsustainable cost bases that force customers to go elsewhere.

Mr Harmer says traditional insurance products are losing relevance.

Companies’ most valuable assets are information and ideas rather than bricks and mortar, but “insurance is still focused on tangible assets and liabilities”.

He says brokers must begin demonstrating their value through advice and round-the-clock service through multiple channels.

“Customers will increasingly value advice on identifying and managing changing and new risks, creating an opportunity for brokers to reclaim their profession.”

Mr Harmer predicts further consolidation, clustering and partnering, with globalisation of the insurance market bringing new competitors from abroad.

He also forecasts a shrinking insurance talent pool as Baby Boomers retire.