The threat that can make advisors redundant

As the industry tries to keep pace with consumer demands one trend could eliminate the need for advisors.

Consumer demand for online insurance offerings could lead to the demise of advisors with some insurers.

“There are a lot of advisors that are concerned and it’s a concern because if at some point [carriers] feel it’s more profitable to distribute products [online] that could eliminate the brokers for certain carriers,” said Lorne Marr, director of new business opportunity at LSM Insurance. “These are old public companies so in essence they have a responsibility to their shareholders – not their brokers.”

The P&C industry has already seen the start of this, with home and auto insurance in particular being offered direct online.

 “I think you may see the bigger carriers try and strengthen their direct channels and the smaller to midsized carriers work more via the broker channel,” said Marr. “I think that’s going to be their niche going forward. They’re going to say we’re not your competition; you’re our sole distribution channel.”

It will be key for advisors to be more strategic about who they partner with and develop relationships with clients.

At the moment, the more commodity type products like Term 10 or Term 20 are being offered direct, but advisors can set themselves apart with the more advanced offerings.

“That’s where the brokers are really going to be able to differentiate themselves because you can’t really do that with a direct offering,” said Marr. “You can’t go online and get into detail on what you need on more complicated products like disability insurance. It’s very hard to buy those types of products via direct channel because it’s too hard to go through the process.”