CII points to deterioration in traditional branch-based model for SME insurance

Organisation updates the market in latest Underwriter of the Future report six years after the first edition was published.

The Chartered Insurance Institute’s (CII) underwriting faculty has analysed the projections it made about 2022 in an update of its Underwriter of the Future report. The first edition was published in 2012.

The latest report, published in association with management consultants Oliver Wyman, looked at a range of factors including changing distribution in SME insurance, changing customer demands and pressure on supply.

According to the organisation, at the larger end of SME, person-to-person relationships still predominate, but the economics of the traditional branch-based model continue to deteriorate.

It also found that customers are demanding more price transparency, faster turnaround times and lower cost – forcing insurers to significantly re-engineer their service proposition and operating model.

And that ongoing abundance of capital continues to put the traditional industry under major cost and competitive pressure.

Fragmenting
The CII highlighted that the traditional broker-insurer-reinsurer value chain is fragmenting with innovative insurers showing willingness to separate capital provision from risk selection and underwriting.

The report also noted that some non-insurer players such as brokers, MGAs and reinsurers were starting to bypass traditional primary insurers to create their own new hybrid models.

The work has been produced to help the industry of today prepare for the challenges of tomorrow with the CII stating that the research was a “barometer of what has happened in underwriting and what the future may look like”.

Strategies
Matthew Connell, director of policy and public affairs at the CII, said: “This excellent piece of research shows the different strategies open to insurers, and how this can affect demand for skills.

“It is a useful guide for people planning their training and development and provides invaluable market context for professionals shaping their careers. As a profession we need to be looking at the changes affecting our sector in order to continue being relevant to the needs of our consumers and clients.”

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