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Professional education is the key to brokers’ future

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Broker education and the best way to deliver it is a much-debated issue that isn’t going to go away. If it’s not addressed and some serious blockages cleared, brokers will be the losers.

That was the basis of a speech by retiring AIMS GM Martin McAvenna at the broker joint venture’s conference in Barcelona last week.

Both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the National Insurance Brokers Association (NIBA) provide broker training. Mr McAvenna called for professional training that arms brokers for a very different future, and warns the present situation isn’t sustainable or adequate.

NIBA only became seriously involved in the training game in the 1990s because ANZIIF had dropped the ball. The institute was accused of treating broker education as a cash cow while providing no innovation and minimal maintenance. Much the same situation has developed in the past few years in New Zealand.

Mr McAvenna, a highly regarded administrator with many years’ experience as a broker, is one of the industry’s deeper thinkers, and his call to action is difficult to resist. He says brokers, particularly those dealing in the SME market, face unprecedented pressures to survive and thrive in a new world where the established order is rapidly changing.

Innovative market intruders like Uber and Airbnb are examples of a new kind of challenger that is breaking down long-established legacy industries like the taxi industry. Insurance broking is another industry under threat.

Pointing to the interest in insurance being shown by technology giants like Google, he asked: “What happens when the new actors,
companies which have more money than the average nation, decide that insurance on a global scale seems like a good idea?”

He says such companies have the data and knowledge to “decode the insurance product, simplify the process, price it globally and make it seductively easy”. 

The recent Vero survey of SME businesses demonstrated how customers are embracing online initiatives and changing their purchasing habits.

Over a two-year period the use of brokers by SME and micro-businesses declined by 11%, and 56% of SMEs said they did not use a broker to buy their insurance.

“This buyer behaviour is demonstrably linked to strong technology offerings, good products, slick presentation, ease of use – and price,” Mr McAvenna says.

He believes “a process of disintermediation” is beginning and the insurance industry is entering “a new age of disruption” that will change the insurance landscape.

“Emotional intelligence and how to deliver on it will become much more prominent
in the broker-client relationship,” he says, calling for a “new compact” with professional education.

Data analytics will be a major feature of the new broker model, with drastically different service expectations and brokers needing different technical skills.

Mr McAvenna warns the education of insurance professionals “right across the general insurance industry in broking, underwriting and distribution, is approaching its event horizon”.

Few would argue that the average insurance brokers of 2020 are going to have to be far more switched-on, business-savvy and service-sensitive than the generation they’re taking over from.

And there’s little doubt that the SME broker will go the same way as so many other service groups whose skills failed to keep up with changing realities. They will have to be capable, reliable and knowledgeable insurance professional who really do make a difference to small businesses’ insurance experience.

But as Mr McAvenna points out, achieving that is going to require some big thinking, which isn’t easy when the broker education system is fragmented.

For far too long the industry has had divided loyalties over broker education, for whatever reason. Over the past few years there have been many oblique references from industry leaders to the need for better and more responsive education for brokers, but few before Mr McAvenna have so baldly pointed out a major obstacle to framing a broker education initiative to meet the new challenges of the 2020s.

As he put it: “Why are there two professional organisations, NIBA and ANZIIF,
competing in this space
in the Australian market?”

Calling the present situation inefficient, duplicative and inefficient, he suggests that the solutions to the issue might not necessarily be found within the present insurance education spectrum.

“Bring in some outsiders,” he said. “Take a different perspective. 

“If our industry makes the educational choice to be broader and more rigorous,
and more than vocational training.
we can shape the outcome.”

The alternative he presented to the AIMS audience is not an attractive one: “If we react rather than choose,
the outcome will be shaped for us by our customers and the markets.”

Mr McAvenna says brokers develop their professional capability
with a blend of street smarts and learned experience, “plus a certain level of formal industry studies mandated for professional accreditation”.

“In their present form
the divergent formats for industry education will not be enough
for the age of disruption.”

The reasons behind the split in broker education between NIBA and ANZIIF are historic. But they can be healed. The old enmities are gone, but the determination to retain the competitive status quo is still there.

Many broker leaders has spoken to believe there has to be change. They say NIBA’s education activities are a distraction from what should be its main game: representation.

ANZIIF is the industry’s primary education-provider, but its focus on geographic expansion over the past 15 years and a perceived lack of interest on its core constituency in Australia and New Zealand have often disillusioned its members, and there’s no doubt its growth ambitions have led to schisms with the broker associations.

Change will wait for no one. As Mr McAvenna has pointed out, it’s time to get serious about the future of broking. The divided house of professional education needs to be discussed and dealt with.