Brokers urged “on-line”

There is no reason to believe the Internet will “disintermediate” the insurance industry says Applied Systems president Jeff Purdy. At a recent series of symposiums across Canada, Purdy urged brokers to see the Internet as an opportunity for third party transactions, rather than a threat from direct sellers. However, brokers “need to address [new competition] quickly”, he adds, whether it be from direct insurers or other brokers expanding their reach through the Internet before customers are lured away by the promise of quicker, cheaper transactions. “If you can buy insurance for 15% less and more quickly [on the Internet], what’s the incentive for that customer to stay with the broker distribution channel?”

Brokers can use the Internet not only to get more business volume per employee, but also to expand product lines, Purdy says. A technology strategy is an integral part of future growth planning, he comments, and this should include the potential sale of a brokerage to a larger company or consolidator. Brokers who don’t see themselves in business five years down the road should align their technology with prospective buyers. “A lot of acquisition companies out there will be glad to share their technology vision [with brokers].”