UAE: Insurance brokers have big role in price discovery
Source: Middle East Insurance Review | Dec 2017
Corporate customers tend to depend on brokers primarily for “independent” price discovery and are less influenced by the latter in insurance purchase decisions, according to a recent survey.
The survey among corporate entities in the UAE found that, while brokers may be an increasingly preferred channel by corporates, brokers seem to have less influence in the decision-making process of corporate customers and are used mainly for price discovery, according to the report by Insurance Monitor.
Decision-making by corporate appears to be directly linked to the service levels and credibility of the underlying insurer, with price cited as the top consideration, followed by the brand of the insurer, servicing during claims, industry knowledge and finally “recommendation by broker”. However, the report argued that influence by brokers may be indirectly exerted where undue loading by brokers persists.
The report also infers that with the growing tendency of corporates to turn towards “independent” price discovery, the broker market is set to grow and gradually affect the overall distribution-mix of the industry.
Further findings suggest that corporate entities strongly consider specialisation of insurance by area/type of risk when purchasing insurance, with only 25% of respondents citing that they would consider a one-stop shop for all insurance needs.
Going forward, corporate entities rank “end-to-end insurance risk management services” as the top expectation from brokers in the next three to five years. This entails tailoring products on a need-basis, assisting corporates to identify and minimise risks before risk placement, and representing customer data in the underwriting process and more. M