Why specialist expertise matters in a commoditised insurance market

Much of our industry’s attention right now is fixed on the soft market and all the challenges it brings. 

Understandably so. Competitive pressures are forcing every insurer and broker to react and adapt. Some are pushing hard for volume, accepting margin deterioration as the price of growth. 

Others are taking the opposite path, prioritising discipline over share. 

Few, if any, can pretend this won’t shape results in the years ahead, not now that most insurers have genuinely forward-looking portfolio metrics. The days of the market cycle only being felt once the impact lands in the results should be behind us.

Alongside this, many organisations are looking hard at expense reduction. That’s a legitimate and important part of the value we owe customers, and the possibilities presented by artificial intelligence and automation have rightly attracted significant attention. They represent a real, and probably permanent, shift in our industry’s operating model.

Markets evolve, technology advances and customer expectations shift. The more interesting question, to my mind, is what should remain unchanged. What remains true regardless of market conditions? And as we automate more, what should remain distinctly human?

Richard Coleman, Ecclesiastical Insurance

At first glance, these may seem like separate challenges. In reality, both are contributing to the same risk: the increasing commoditisation of insurance. 

One drives intense price competition. The other drives standardisation and efficiency. Both make it more important than ever to be clear about where genuine value lies.

What should stay the same

In thinking about this piece, I found myself reflecting less on the pressures of the moment and more on what needs to remain constant while everything else changes. 

Markets evolve, technology advances and customer expectations shift. The more interesting question, to my mind, is what should remain unchanged.

What remains true regardless of market conditions? And as we automate more, what should remain distinctly human?

For me, it ultimately comes down to differentiation and relationships.

I still believe firmly in differentiation. It may be harder to achieve in a market like this one, but it is no less important. In fact, I would argue it becomes more important as products and services risk appearing increasingly similar.

Differentiation is often most visible when customers need us most. It is found in the judgement exercised during a complex claim, the expertise used to tailor cover to a customer’s specific risks, and the quality of risk management advice that helps prevent losses before they occur. 

These things are harder to reduce to a simple price comparison, but they are frequently what matter most when the moment of truth arrives.

Whatever the market cycle, and whatever the pace of technological change, these are the things that need to keep counting.

People business

Relationships matter too. Even in a world increasingly shaped by AI, insurance remains fundamentally a people business.

When we insure something complex or difficult, specialist advice provides reassurance to both brokers and customers. The dialogue required to properly understand, assess, manage and transfer risk depends on expertise, trust and engagement. 

Technology can undoubtedly enhance that process, but it cannot fully replace it.

For me, relationships also mean understanding our customers deeply enough to know what matters to them. Without that understanding, how can we genuinely differentiate our offering? 

How can we design products, services and experiences that meet their needs? And perhaps most importantly, how can customers feel confident that we understand their world and are on their side when it matters most?

Beyond price

These are principles our industry must continue to invest in, articulate and protect. They should stand alongside price as a core part of the buying decision. 

That remains true whether the market is hard or soft, and whether the customer experience is delivered through automation, personal interaction or a combination of both.

The pressures we’re navigating today, a soft market and the rise of AI, will, in time, be replaced by others. What must endure is our commitment to expertise, judgement and relationships. 

Because while insurance may be treated by some as a commodity, it is rarely experienced as one when a customer faces a complex risk or a difficult claim.

If we can respond to today’s challenges without losing sight of that long-term truth, our industry will be in good shape whatever new challenges tomorrow will undoubtedly bring.