Would a joint marketplace for (re)insurers do away with the broker?

There has been talk in the industry about whether (re)insurers should set up a joint market platform to reduce costs.

However, such a platform might mean brokers’ commission costs are cut or the broker is done away with entirely; if this was the case would the brokers role change?

This was one of the questions posed to delegates during a panel discussion on how brokers and insurers see each other’s future roles, on day three of the Singapore International Reinsurance Conference (SIRC) in Singapore.

Most delegates thought the broker’s role would stay largely the same, while a sizeable minority thought it would decline.

When the same question was posed to panelists, Talil Al Zain, group chief executive at Trust Re, said that the more important question is what the future role of the broker will look like.

While he did not think that the broker would die off, he questioned whether brokers would continue to be an intermediary, or something different.

Al Zain also pointed out that there were many other ways of reducing costs, such as technology. “I do not think that we can get rid of brokers,” he said.

Panel moderator and insurance correspondent Herbert Fromme, on the other hand, mentioned cutting brokers’ commission, which the FCA has recently spoken about. 

He reiterated that in (re)insurance, a human touch is always needed.

Defeating cost pressures

James Nash, chief executive, international, at Guy Carpenter, told delegates that he believes in the future of the broking fraternity, especially with the rise of intangible assets such as cyber.

He suggested Lloyd’s looks at the frictional cost of its marketplace.

Claudia Salem, chief executive in property and casualty, Asian Pacific at Allianz SE agreed.

She said: “We are all under cost pressure, but the winners will be those that can recreate themselves. We don’t know what’s going to happen, but we know that change is coming.”

Salem added that the industry needs a solution-based approach as opposed to product providing.

But, the role of the broker is maturing. In India, for example, Devesh Srivastava, general manager at General Insurance Corporation of India, Global Reinsurance Solutions (GIC Re) said that young people prefer having the broker in-between.

Nash added that there are areas of the sector that would benefit from collaboration, while Frome mused on the role of technology.

When delegates were asked if the importance of insurance will grow, the majority agreed it would.