Directly sold insurance is gaining traction among Australia’s small and medium-sized enterprises (SMEs), especially for business packages, cyber, tradie and small commercial motor policies. While brokers continue to place the majority of commercial insurance, the landscape is shifting as digital direct channels are expanding their reach into the commercial space.
But how worried should brokers be about the direct threat? Is the industry witnessing the beginning of a fundamental change in the broker’s role — one that could mirror the transformation of the travel industry?
IB is asking brokers to contemplate the unthinkable: is their profession going the way of travel agents? Today, most people book flights and accommodation through online apps with only specialist or high-end travel agents surviving by offering bespoke services. The insurance sector is seeing a similar trend, as digital platforms make it easier for SMEs to compare, purchase and manage insurance directly.
IB asked Tanya Kliese (main picture), director of Design Cover Insurance Brokers, if brokers will increasingly need to follow the travel agent example to stay in business? “I think that's both a good point and a concern because brokers are becoming more specialist in terms of risk advice and risk mitigation and also more focused on providing a specialist service for their clients,” said Kliese.
Statistics show that the digital threat is increasing. According to the National Insurance Brokers Association (NIBA), brokers placed over $23 billion in gross written premium (GWP) in 2023, yet direct channels are growing, particularly in personal and micro-SME lines. Some industry data shows that direct sales now account for over 40% of SME business package policies and are making significant inroads in cyber and tradie insurance. The COVID-19 pandemic accelerated this shift, with more SMEs comfortable transacting online and seeking instant quotes and coverage. “I think directly sold insurance has changed and AI technology means that there are more options - people are also more comfortable now transacting online," said Kliese.
Some brokers are also reporting that their SME customers are more interested in exploring directly sold options, often drawn by lower prices and perceived convenience. “They do ask what's the difference and I normally point out the coverage gaps because the online model is a one solution fits all - so anything outside the box is not covered," said Kliese.
However, cost pressures on SMEs can make these arguments a tough sell. According to recent surveys, over 60% of SMEs cite price as their top consideration when purchasing insurance, but many only discover coverage gaps when making a claim.
Many brokers would insist that the value for an SME comes from the broker relationship.
“Particularly if it's for complex businesses or businesses that are of high value, I think it's vital that they get someone that understands their business,” said Kliese. “I think brokers hold strong when SMEs need a tailored solution and when things get rough.”
To remain indispensable in a rapidly evolving market, brokers must double down on their core strengths: risk mitigation, specialist expertise and unwavering client advocacy. As digital direct channels continue to expand and commoditise simpler products, brokers who deliver tailored advice, genuine empathy and deep industry insight will set themselves apart. By proactively demonstrating their unique value — navigating complex risks, closing coverage gaps and championing clients through claims, brokers can not only withstand the direct threat but reinforce their dominance in the commercial insurance space. Unlike travel agents, whose relevance was eroded by technology, brokers have the opportunity to evolve and remain the trusted advisors that businesses cannot afford to do without.
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