More and more often one hears meanwhile that the insurance broker will die out. The number of registered insurance brokers in Germany drops drastically every quarter. However, in my opinion, the decline cannot be applied across the board to all insurance intermediaries. In my opinion, one “species” of the “insurance broker type” is particularly threatened with extinction: the insurance agent.
To begin with, a brief explanation of the terms, as the different terms for insurance intermediaries have been used incorrectly by most people since the Big Bang:
Not all insurance intermediaries are the same
Insurance intermediary: that’s ALL (the “genus”, so to speak).
Insurance agent: only works for ONE insurance company (the typical Allianz agency). Often referred to as an exclusive agent.
Multiple agent: is also an insurance agent, but usually for 3-5 companies
Insurance broker : does not work for an insurance company, so is not bound by instructions and legally on the customer’s side.
Now that the definitions of the terms have (finally) been clarified, we can turn to the impending extinction of the insurance agent.
My opinion – and yours!
Below I present my personal opinion on why I believe that the insurance agent is an obsolete model, but I will also back this up with a few observations that cannot be dismissed out of hand. You are welcome to add your mustard in the comment field under the article. Is not only wanted, but also wanted. I don’t have a glass ball myself either ;-)
1. High average age of insurance agents
When I go to an insurance fair when I’m in my early 30s, it’s like stepping into a fountain of youth. Suddenly I feel like 16. Not because I’ve actually gotten younger, but because the rest around me are simply stone old. The average age of the insurance agent is between 55-60. Some studies even claim that it is even higher.
No offspring for insurance agents in sight
That alone is no reason that the insurance agent will die out. The problem is rather that there are not enough offspring. And when it comes to not enough, I don’t actually mean any. Nobody stands in line and says: “Hey cool, fat! I take over your agency! I’m really up for it! ”
And the conclusion is that because of that alone, a great many insurance agent agencies will shut down. You can already see this in many towns across Germany. Incidentally, the same applies to banks, albeit for slightly different reasons.
2. Competitiveness is approaching zero
Why have insurance agents been so successful in the past but are less and less now? The answer (in my opinion): You just didn’t have a lot of options before. You either went to the local insurance agent or to the insurance broker. And as a rule you went to someone who was in the same sports club with you and not to someone who is “more independent”. As I said, until today almost nobody knows what the difference is between an insurance agent and an insurance broker.
Higher comparability through the Internet and comparison portals
And then suddenly this internet came along. Everything suddenly became much easier to compare. Insurance comparison portals have sprung up, above all Check24. Four clicks and you can see what home contents insurance costs. And there is even the insurance from the local insurance agent. Can I do this online and save myself the trip. Oh wait, there are four other providers with better services and cheaper prices. hot!
The insurance agent is left behind
In other words, the increasing comparability and transparency is becoming a major disadvantage for insurance agents, who are only allowed to walk around with their very limited vendor’s tray. “What is the chance that you will find the right insurance right there …?” I don’t ask the question, but the customer asks himself.
3. Dependence of the insurance agent on the (re-) action of the parent company
Especially on Instagram ( @versicherungenmitkopf ) I keep getting messages from insurance agents. There they write that they would like to do a little social media here and a little online advice there, but unfortunately their parent company forbids it or strictly regulates it. And that’s understandable in a huge store somewhere. But leads to a clear competitive disadvantage for the insurance agent.
You always have to ask “Papa Versicherung” first whether you are allowed to do something or not
As a freelance insurance broker I can implement new ideas every day and drive new marketing strategies, the insurance agent always has to ask for permission first. If he’s still up for it after receiving a no for the fifth time in a row. And those who fail to generate reach or be found via social media or the Internet will no longer be relevant in a few years. Incidentally, this applies to every industry and especially to German medium-sized companies.
Dependency often leads to a competitive disadvantage
This strong dependence on a corporation is therefore an extreme disadvantage in the fast-moving world in which we live, especially when it comes to digitization. Which brings us to the next point.
4. Light years back in digitization
I’m not sure if light years is the correct name. A light year is a measure of distance and not time. On the other hand, both would apply. The insurance industry in general is simply incredibly far away from the current state of digitization – in terms of time and space. And where the independent insurance broker can in turn directly incorporate new technologies, such as online appointment booking or online advice, the bound agent has to wait for what comes from above. This also plays a role in reason no. 3.
The whole of the industry is lagging behind
But since the entirety of the insurance industry is still in the digital stone age, it is generally difficult for any broker if, for example, he would like to position himself more digitally. The customer wants it. Digital signature, here you go.
“Sorry, could you have the original signature please? There is no extra effort, is it? You can then fax the document to us … ”
I love my job, but at moments like this I always turn left and right and try in vain to find a hidden camera. So far only ever found my own cameras. Unfortunately. I would laugh if it wasn’t so incredibly sad.
Digitization is not waiting for the insurance broker from the day before yesterday
To round off this point: Digitization in the insurance industry is advancing as fast as I am on the way to a root canal treatment at the dentist. All intermediaries who would like to position themselves more modern and digital have to struggle with this. But the insurance agent is a little slower in my opinion.
Maybe because it has become comfortable over the years and is resting on its stock? Oops, did I really just write that …?
5. Realignment of the insurance groups / attack by the big players
My last train of thought has it all again. And it is perhaps more of an assertion and observation than something that I can substantiate. But I just have eyes with which I can see what’s going on and a brain that can add one and one together.
More and more direct insurers in-house
If even very large insurers with an extremely large number of insurance agents are increasingly relying on online sales and launching their own direct insurers, then you have to ask yourself where the insurance agent still plays a role in the end.
Competition for the insurance agent comes from within
That’s practically nothing more than telling your staff: “Watch out, guys, we now have a new project here, so customers can take out insurance directly themselves. Super modern, always available for the customer, it is also cheaper because we save the distribution costs for you and there is also a mega “customer journey”. But don’t worry, you are important too ”. Yeah, sure.
From the perspective of an insurer, consider the whole:
Big players like Amazon and Insuretechs like the US startup Lemonade are entering the German market. AI (artificial intelligence) and big data play a major role here. I haven’t read anywhere about a sales team that is being recruited. Online marketing experts yes, but not insurance intermediaries.
Realignment of insurers begins
What do you do here as a German insurer? You try to position yourself well there, because in the end the customer only wants one thing:
Insurance that pays in the event of a claim, and that is as simple and inexpensive as possible. But the customer doesn’t want an insurance broker! He just had no other choice for the past 100 years.
And I wouldn’t do it any differently as an insurer. But you can’t say directly to your sales team, which (still) makes the largest part of the turnover, that you will probably no longer need them in the future. At least most of them no longer. Quite a dilemma …
My opinion – no more, no less
I would now like to point out again that the article reflects my personal opinion on the subject. Much of it I cannot justify scientifically or refer to any studies.
But I’ve been watching very closely what is happening in the industry for a number of years. I listen to colleagues, but above all I also listen to what the customer wants or wants. And we are still very, very far (light years ?!) from the customer’s wishes as to how he would like to have the subject of insurance taken care of.
The entire industry might just have to listen more closely, take off the rose-colored glasses you put on yourself and then give the customer what he wants.
What is your opinion? Leave me a comment!