Aussie brokers upbeat
03 Jan 2017
The vast majority of players in the Australian insurance broking industry expect revenue and profits to continue to grow in 2017 albeit at lower rates, according to the Macquarie Business Banking 2016 Insurance Broking benchmarking report released last month.
Insurers are shunning unprofitable business, reducing discounts and lifting rates, all suggesting a hardening of the SME market, and increasingly favourable industry conditions in the second half of 2017 and full year 2018.
The report said that 87% of firms were forecasting higher revenues in FY2016, with new client growth and improved operational efficiencies again the two most commonly cited factors expected to drive revenues and profits. 76% expect profits to rise in FY17.
Data from a survey of around 200 insurance broking firms across Australia showed that 63% grew revenues in 2016, and over half attributed this to increased marketing and sales activity, diversifying revenue streams and acquisitions. Some 25% reported revenue declines in the last 12 months, compared to less than 10% in 2013 survey.
Structural reforms are underway in the industry, for example, staff numbers per firm have come down (from 12 to 10 between 2013 and 2016), with firms tightening operational costs, and market consolidation. More consolidation is expected in the year ahead too.
“Successful insurance broking firms are seeing the opportunity in a challenging market, and are looking to adjust their business model, utilising new technology and tools to stay at the forefront of the market and deliver an exceptional experience to clients,” said Mr Eoghan Trehy, division director for Macquarie Business Banking.
He noted that only 5% of new business comes via an insurance broker’s website, while only one in 10 offer full quote, bind and pay capabilities online.
“Utilising new technologies to automate lower value transactions and on-boarding processes can free up staff to focus on higher value opportunities and delivering personalised experiences for clients.”