The document discusses how insurance brokers can stay relevant in an era of disruption from new technologies. It makes three key points: 1) Brokers must innovate by becoming holistic risk consultants rather than just transactional specialists, and by building trust with clients through strategic advice and consultative offerings. 2) Brokers need to learn about evolving risks like cyber threats and educate clients, and leverage advanced technologies to create tailored solutions through data analysis. 3) Brokers must adapt their business models to offer clients what they want through digital platforms, mobile access, and ease of purchasing, while focusing on expanding innovation strategies.

1. July
2017
Volume 65 . Number 7
PropertyCasualty360.com
Hiring for Innovation
FINDING TOMORROW’S TALENT TODAY
Reprinted with permission
from the July 2017 issue
of Claims magazine
E-CIGARETTE
DANGERS
PG 12
STAYING RELEVANT
IN AN ERA OF
DISRUPTION
PG 26
PREDICTIVE
MODELING
PG 30

2. 26 | July 2017 | Claims Magazine | PropertyCasualty360.com
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Staying Relevant in an Era
of Disruption
By José Manuel Dias da Fonseca, CEO, Brokerslink
T
he future of the insurance bro-
ker is under threat. The danger
comes from new technologies
that are reinventing the insur-
ance industry’s distribution chain, its
business models, and arguably even soci-
ety as a whole. Many believe that the cur-
rent shift towards a globally connected
network of businesses will result in wide-
spread disintermediation.
However, this future is not so black and
white. The change is very real. New tech-
nologies are altering business processes,
and ‘disruptors’ are constantly emerging;
but instead of feeling threatened, we must
see these developments as an opportuni-
ty to evolve. By changing the way we see
ourselves, and modifying our approach to
the business, the good brokers will sur-
vive and prosper.
Failure to acknowledge the challeng-
es that have arrived with the digital era
would be a big, possibly fatal mistake.
Equally, failure to recognize and act upon
the opportunities it presents would be di-
sastrous. We must adapt to become much
more efficient and more accessible to our
clients. But if we don’t identify the areas
where we have to improve and advance,
don’t make the right investments and

3. PropertyCasualty360.com | Claims Magazine | July 2017 | 27
learn how to become much more useful
to our customers, we risk redundancy.
Innovate
The threat of disintermediation is
not new. The best way to deal with
this threat is to innovate. Granted,
innovation is already a high priority on
the boardroom agendas of insurance
companies and brokers. But while there
are discussions at high levels about
innovation, industry executives and
market commentators have noted that
the industry needs to work harder at
being innovative.
Rather than discussing innovation
once a month during a board meeting, we
must constantly work to improve. Busi-
nesses must adopt broader approaches to
stay nimble and focus on expanding their
innovation strategies.
Consult
Brokers’ key roles include areas where
innovation is vital such as risk manage-
ment, strategic advice, and negotiation.
All of these are qualities that can hardly
be replaced by codes or algorithms. They
instead depend on human social quali-
ties and cannot be replaced by technol-
ogy (at least, not yet). Brokers must alter
their business models to emphasise these
interpersonal and social qualities, their
strategic advice, and their consultative
offerings. To survive, brokers must adapt
their role to act increasingly as holistic
risk consultants, not just transactional
market specialists. Such a shift will pave
the way to build and maintain trust be-
tween brokers and clients. Trust is essen-
tial to maintain and attract business, and
is a something else that computers can-
not guarantee.
Trust
Brokers can innovate by building this
trust, which in turn increases business
retention. It is very important that clients
trust their broker’s judgement, their risk
assessment counsel, and their strategic
planning. That means embodying the role
of the trusted adviser and using it to build
strong and positive reputations in a com-
petitive market.
The most effective way to achieve this
trust and build an unassailable reputation
as an essential business partner is to con-
stantly deliver innovative solutions that
fit each client’s specific risk profile and
appetite. Renewal at expiration is not the
path to survival.
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4. 28 | July 2017 | Claims Magazine | PropertyCasualty360.com
Learn
Risks are constantly changing, so edu-
cation is important. To succeed, brokers
must be experts in new and evolving
fields such as cyber threats, environmen-
tal impairment, reputational risk, and
complex terrorist attacks. Customers are
increasingly hungry for advice in these
areas, and seek an informed broker to
work closely with them to help gain an
understanding of how these new perils
may pose a threat. They want protection
for their businesses through tailored, tar-
geted, inclusive solutions.
As risks continue to develop and
evolve, so too must insurance solutions.
First, we must understand the modern
risk landscape and learn to assess it with
confidence. Then we can adapt our busi-
ness models and the products to deliver
the benefits to clients. Brokers must be
willing to be proactive, and embrace the
challenging future.
Digitize
There is, of course, a key place for tech-
nology in this new business strategy.
Brokers can and must leverage the most
advanced technologies to best inform
their risk management advice. They
must fully understand their clients in
order to create tailored solutions that
fit their risk profiles, which probably
means harnessing advanced analytical
technology to peer deeply into their cli-
ents’ businesses. Nowadays, customers
increasingly look for speed, ease and
convenience in their business transac-
tions. The balance of power has shifted
towards them. They want insurance and
to purchase it in a manner that suits
their preferences. Therefore we must
ensure that our technology can be em-
bedded into existing policy administra-
tion systems.
Commercial brokers have always
struggled against competitive forces and
survived. Now a new threat, the tech-
nology disruptors, has already gained an
edge by harnessing big data and deploy-
ing analytics. Brokers must take steps to
deliver innovation in this critical area.
They should adopt technology to capture
and analyze large volumes of data, and
create methods to structure and opera-
tionalize it into the quantifiable insights
that clients and insurers demand. All of
that means we must invest significantly in
technology, and embrace it, rather than
viewing it as a threat.
Adapt
The transformation of traditional busi-
ness models is driven by social changes
that are fuelling the shift to increased
consumer power. The uptake of mobile
and online technology has caused a ma-
jor change in customer expectations.
Brokers must embrace this change as an
opportunity. We have to offer clients what
they want, in a way that best suits them.
We must adopt new business strategies to
stay ahead of the curve. We all must focus
on expanding innovation strategies, and
continue investigating, adopting and de-
ploying new technologies.
Survive
In order to stay relevant in the era of dig-
ital shifts, we must evolve. We don’t need
to revolutionize the way we trade, we
need to change the mechanisms. Compa-
nies already offer insights, skills, services,
and a human ability to judge and analyze
which cannot be replaced by competitors
grounded only in technology.
Insurershavestrong,establishedcustomer
andmarketrelationships.Theirgoalistogive
clients what they now need and rightly want:
a comprehensive, informed, twenty-first
century risk consulting service, which deliv-
ersthebestpossiblesolutionsevery time.Do
that, and our future is secure.
José Manuel Dias da Fonseca
(jmdfonseca@mdsinsure.com) is the CEO
of Brokerslink.
In order to stay relevant in the era
of digital shifts, we must evolve.
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