Insurance brokers and agents believe an economic recession is looming, with nearly three-quarters of respondents to a recent survey conducted by American Modern Insurance Group indicating that they believe the West is likely to enter a recession in the next 12 months.
If a recession occurs, brokers said that out of that scenario, they are most concerned about consumer price sensitivity (82%) and that consumers may be willing to do without insurance (65%).
Many brokers are also concerned that insurers may experience an increase in fraudulent claims (49%) due to a worsening economic situation for citizens.
Leading global reinsurer Munich re, last week this October, released its 2023 broker outlook report on key issues shaping the property/casualty and personal lines market, based on the results of a recent survey of independent insurance brokers and agents.
«Este estudio revela información muy interesante de corredores y agentes de seguros independientes con experiencia que están en la primera línea de nuestra industria», dijo Andreas Kleiner, presidente y director ejecutivo de American Modern. «Sus perspectivas resaltan factores importantes que dan forma al mercado de daños materiales y siniestros de particulares, incluida la tecnología, la seguridad de los datos, el cambio generacional y la economía».
Key findings of the report:
- Seventy percent of brokers expect the demand for homeowners and renters insurance to increase over the next five years, while 55% anticipate a greater demand for insurance for prefabricated and pre-engineered homes of all types (which are booming in Spain).
- More than half of the respondents expect the demand for coverage for boats/watercraft (58%) and vehicles (57%) to remain more or less stable over the next five years.
- 80% of respondents see generational differences in the insurance buying behavior of their clients. Younger clients are perceived to have a much greater interest in new technologies and are more concerned about climate change.
These young people are also believed to have a somewhat higher risk tolerance. On the other hand, older clients are perceived to be much more financially literate and more willing to plan for the future. They also appear to have a greater commitment to home and business property damage risks and a greater interest in owning vehicles and other insurable assets (the older ones).
For information purposes only, and as far as Spain is concerned, we must bear in mind that 65% of the national economy is controlled by older and more mature people, and among them we include the almost 10 million retirees.
When asked about the impact of technology on the insurance brokerage and agency business, respondents ranked data security and privacy as the most important issue (84%), followed by the internet of things, which includes devices, appliances and sensors for "smart homes" (61%). Half of brokers and agents said the business impact of direct-to-consumer platforms was important, while about a third (35%) believe artificial intelligence will change the way they work and how they approach future business with their customers.
- Approximately 3 out of 4 brokers expect artificial intelligence to be disruptive to the industry over the next five years.
Respondents cited talent recruitment as the number one job challenge insurance agencies and brokerages will face: 51% said it was a major challenge and another 20% rated it as a minor challenge. Forty percent of brokers considered the increasing demands for higher salaries from these potential workers to be a major challenge, followed by ways to motivate/engage employees toward the brokerage and its goals, as well as maintaining peak performance and dedication from them, both at 30%.
Despite headlines about the desire to work remotely, employee resistance to working face-to-face is not perceived as a problem: only 20% cited it as a major challenge or something to value in hiring and/or retaining employees, while 43% said it was not a challenge at all.
This survey was conducted in August 2023 by American Modern among brokers and agents.
Galilea Group - October 2023