Malta’s insurance broker community could win a larger slice of the local market if there were greater awareness of a broker’s role, Association of Insurance Brokers chairman Sean Agius told The Times Business.
There are 28 insurance brokers of all sizes nationwide, with a handful passporting rights from international brokers. Together they employ around 220 people.
Their market represents 60 per cent of the premium generated locally but Mr Agius believes their share could rise to 65 within a few years with some campaigning.
The association counts 15 of these brokers among its membership, including many of the larger ones.
“There is little awareness about the insurance broker’s role and we aim to work on increasing consumer knowledge,” Mr Agius explained. “Unlike tied insurance intermediaries which represent only their principal, brokers have only the client as their principal. After being presented with a proposal by a client, brokers identify the most appropriate markets and cost-effective pricing to meet it. As insurance is a cost, price matters. Unfortunately, brokers might be seen as the ones who put down pricing in the market. As brokers represent the client, regulation is more onerous on them. Clients could be better informed of the additional, personalised service they are receiving for the same price.”
Mr Agius believes that once potential clients understand the distinction, they would be more likely to turn to brokers for insurance services.
Brokers obviously receive commission from the insurer which issues the policy, but Mr Agius said they shoulder more direct responsibility towards the client, even in case of claims.
Brokers, he said, could be described as the only independent insurance advisors.
Meanwhile, the association is also working to identify ways to regain a foothold in the travel, health and life insurance markets from which they have been squeezed out in the past few years.
Brokers’ business, particularly in personal lines, has faced increased challenges from online services offered by larger organisations. Brokers have examined the feasibility of online insurance products although the investment could prove prohibitive for smaller businesses. One option, Mr Agius pointed out, would be for the brokers to offer online insurance services in groups.
Another new source of business for brokers could prove to be support services to overseas brokers seeking to redomicile in low-cost jurisdictions like Malta.
“UK insurance brokers are seeking to domicile in less expensive jurisdictions,” Mr Agius explained. “This could alter the landscape of the local broking community, although they would not tap the local market.
“Local brokers, however, could offer support services to them. The downside in that scenario is that we run the risk of losing talent to these organisations. To this end, brokers are currently increasingly involved in on-the-job training to address the already existing shortage of talent.”
The association is currently working to share as much information as possible on new challenges facing the market.
At its recent conference ‘Gearing up for a new insurance landscape’, which followed its annual general conference, the AIB sought to update its members and other stakeholders on the requirements of upcoming directives. The conference, which was attended by around 70 people, including professionals connected to the industry, is planned as an annual event.
Over the next few years, Mr Agius envisages brokers consolidating their businesses by merging or negotiating to take over other brokers’ portfolios.
Brokers, he said, might even turn into insurers by specialising and designing products for specific markets and tapping new groups of clients.