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The insurance industry has been an ever-evolving industry with introduction of various insurance products. The industry figures have also indicated the potential of the insurance sector in India. The insurance products is disbursed to end users through direct and intermediary channels. These include insurance brokers, agents etc. Insurance Brokers have played a massive role in the distribution of insurance products to consumers. However, the insurance broking industry hasn’t been devoid of challenges that has delayed its success. This article is an attempt to study the ever-evolving insurance broking industry.
Insurance broker refers to an individual who acts as an intermediary and sells, solicits insurance products. Insurance brokers provide expert advice on the insurance policies to the customers for which they are paid commission by the insurance company.
The insurance industry has been impacted greatly by the insurance brokers, who are crucial players in the market. The role played by insurance brokers has helped customers to arrive at a better decision in terms of finalising insurance cover. Insurance brokers provide its customers with large pool of products and let customers know about each of these products, which helps customers to find the best solution available while keeping in mind the price, coverage and scope of the insurance products.
Insurance brokers are also the main reason behind insurance companies’ success and growth as they are the main distribution channels and thus generate revenue for insurance companies. But it’s not just about revenue generation the role of insurance brokers is more valuable than just revenue generation. Insurance brokers provide market feedback that helps insurers design attractive products that drive adoption. Their valuable feedback on customer requirements helps customers to choose the most suitable products.
Insurance brokers role is so vast that it is not limited to advising customers on best fit products, but they also assist customers in claim handling and simplify different transactions between customers and insurance companies such as sales to insurance renewal, among others.
Further, the dynamic and conducive regulatory setting in the country is expected to drive insurance broking industry growth in the coming years.
In a nutshell, the role of insurance brokers can be summarised in the following points:
Insurance sector has been ever-evolving, and so is customer expectations and demands hence the insurance broking sector needs to constantly adapt and reinvent their strategies to rise above the challenges facing this industry. Let us look at some of the major challenges-
The expectations and demands of the customers have constantly been changing, whether it is in insurance sector or any other sector. Customers want better service from its service providers. Hence service providers have to be on their toes making changes and satisfying customer requirements. Failing to live up to the expectations of customers can have devastating results like losing business etc.
Insurance penetration continues to be a challenge in India, especially in semi urban and rural areas. The lower penetration can be attributed to various factors such as lack of insurance knowledge among customers, complicated policies, brokers’ high cost operating model.
Keeping up with regulatory requirements can be a challenge for insurance brokers who are not well versed with the regulatory requirements. Insurance broker require proper training and qualifications before they can commence their operations in India. Further, they also need to comply with the long list of code of conduct while engaging in broking services. Hence as an Insurance broker, one should be well aware of its roles and responsibilities else it can have a negative consequence.
Insurance policies can be complex to understand, and when a broker is required to simplify this complexity, he must be aware of the policy he is selling in the first place.
Brokers are well suited in a market where there are various products and numerous suppliers. The Indian market has identical products with different prices. This limits the potential role of insurance brokers.
With regulations being issued in favour of corporate agents, the role of insurance brokers appears to be marginalised. In the commercial set up, insurance brokers have been facing relentless pressure from insurers.
Due to the low entry barriers, various brokers have made their way into the insurance broking industry, which has resulted in varied level of professionalism and services delivered by brokers. This has become another cause of concern in the insurance sector.
Insurance brokers should provide a personalised and high value experience to their customers while asserting their added value by helping customers in meeting their financial obligations. In order to overcome the challenges facing insurance broking industry, insurance brokers must use technology to improve their operations and provide insurance products and services efficiently. However, to drive the overall growth of insurance sector, there has to be a proactive collaboration among the stakeholders including insurers, brokers, regulators etc.
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