"Insurance is here to stay, but it is not necessarily going to stay the same"

A LOOK AT THE FUTURE

Insurance is here to stay, but it is not necessarily going to stay the same. This is the view of Michael Blain, CEO of Centriq (pictured right) - the first BEE insurer in risk finance. Instead, Blain believes that the way in which insurance is distributed will transform radically in the years to come.

“The way in which insurance is distributed is going to have to change as consumers become more knowledgeable and as disclosure surrounding insurance products and services improves. However, it would be premature to write the obituary of the independent financial advisor or broker. This is because each market segment will experience any changes to the distribution model differently,” says Blain.

Blain notes that in the future, anyone will be able to purchase insurance via their preferred channel, of which there will be many. From agents and brokers to retail outlets such as supermarkets and banks, as well as via the internet or cell phones, the channels of insurance distribution will continue to increase and evolve. But, as the range of channels for accessing insurance increases, so will the convenience of these channels. “Motor dealers, supermarkets, clothing and furniture retailers, cell phone providers, clubs and unions are all testimony to the trend of increasing convenience when purchasing standardised insurance products. One can expect to see much more of this in the years ahead,” says Blain.

Small and medium businesses are being targeted by direct insurers with some success. However, the complexity of risks faced by most businesses may entrench the role of the broker, especially as the size or complexity of business undertaking increases.

For large corporate and parastatal enterprises, the role of the broker and risk consultant is largely guaranteed. This is due to the corporate governance standards applicable to these entities as well as the sophistication and uniqueness of their insurance needs.

According to Blain, these industry changes will force traditional insurers to adapt to the changing distribution patterns and the ability to partner and outsource will become imperative to business success. “Operational excellence in terms of interfaced systems and processes will set apart the future industry winners from the losers,” he says.

In future, many insurers may struggle with white labelling their products to be sold under the brand of the distribution partner. Compliance and regulation become far more complex in a distributed sales model and will elevate the strategic importance of these matters to insurers.

“It is difficult to anticipate whether consumers will embrace the changes in distribution channels. Failure to meet consumer expectations will now no longer impact on the insurer only, but on the retail distribution partner too. This will test the foundations of the relationships between insurers and their business partners in resolving consumer complaints. At the same time, consumers may appreciate the convenience, simplicity and affordability of products sold via non-traditional channels. Only time will tell for certain,” concludes Blain.