The Essence of Intermediaries in 2021
The Federal Association of German Insurance Brokers (BVK) has released an analysis of the income, employment situation, and economic development in the intermediary businesses, covering around 3,400 intermediaries between December 2020 and March 2021.
According to the BVK's findings, nearly half of the intermediaries would potentially earn more as employees in an insurance company's in-house department. However, the analysis does not provide data on the potential impact of insurtechs and comparison portals on the intermediary market.
The BVK has expressed concern about potential commission bans and a switch to fee-based advice in several parties' election programs. Andreas Vollmer, the BVK's Vice-President, believes that these proposals are populist and unsupported by facts.
In the context of the upcoming elections, political parties in Germany may debate or re-assess these regulatory changes, especially since commission bans can have major effects on sectors with strong lobbying presence like insurance. However, no specific information is found on political party positions or electoral impacts related to this issue in the search results.
Based on the current regulatory environment and typical trends in financial advisory markets, the following can be inferred:
- Commission bans and a shift toward fee-based advice are likely to significantly affect the German insurance brokerage sector. Such regulatory changes aim to reduce conflicts of interest by eliminating commissions from insurers to brokers or advisors, instead encouraging transparent fee-based remuneration agreed directly with consumers.
- Impacts expected include business model adjustments for insurance brokers and advisors, increased regulatory scrutiny and changes in compliance requirements, pressure on smaller brokers, effects on consumer choice and behavior, and potential shrinking intermediary numbers, lack of successors, and an aging intermediary population.
Andreas Vollmer states that election times are not conducive to rational arguments. He also expresses that this doesn't ease the situation in a barely growing market.
The analysis by BVK offers a biennial overview of the industry, with 93.4% of the surveyed intermediaries being exclusive agents. Brokers account for 4.6% of the survey participants, and multiple agents make up 2%.
Insurtechs and comparison portals, according to Vollmer, promise quick and cheap insurance policies while trying to shed their advisory and support obligations. The BVK has expressed mistrust towards these platforms.
It's important to note that the BVK does not specify which European neighbours it is referring to in its statement. The insurance distribution sector has been affected by the Corona pandemic, but the BVK's concerns about commission bans and fee-based advice are not directly related to the pandemic's impact.
Lastly, intermediaries are not typically high earners, and there are visible consequences of shrinking intermediary numbers, lack of successors, and an aging intermediary population. Vollmer states that putting all the pressure on costs on the intermediary is short-sighted.
[1] BaFin - Federal Financial Supervisory Authority [3] German Insurance Supervisory Authority (Gesetzliche Unfallversicherung)
- The concerns raised by the BVK about potential commission bans and a switch to fee-based advice in the finance business could have significant implications for the income of insurance brokers, as many would potentially earn more as employees in an insurance company's in-house department.
- As the financial business continues to evolve, the rise of insurtechs and comparison portals is expected to impact the traditional business model of insurance brokers, with these platforms promising quick and cheap insurance policies but shedding their advisory and support obligations, which may affect the employment situation within the industry.
