Middleman Role in 2021: An Examination
The insurance distribution sector has been significantly impacted by the COVID-19 pandemic, according to a structural analysis conducted by the Federal Association of German Insurance Brokers (BVK) between December 2020 and March 2021. The analysis surveyed around 3,400 intermediaries.
The pandemic exposed coverage gaps, intensified competition, and influenced commission rates and market growth across different lines of insurance. For example, many business interruption policies excluded transmissible diseases, leaving companies without expected protection. This prompted insurers and distributors to reassess product offerings and commission structures.
The increased competition among insurers to offer more comprehensive and attractive products drove innovation in insurance distribution channels, including digital platforms. However, market growth has experienced mixed effects. While some lines like product recall, cyber, and property insurance saw fluctuating pricing and capacity, others enjoyed favorable market conditions.
Andreas Vollmer, BVK Vice-President, expressed concerns that proposals for commission bans and a switch to fee-based advice could be detrimental to the insurance distribution sector, especially in a barely growing market. Vollmer claimed that insurtechs and comparison portals, which promise quick and cheap insurance policies, do not ease the situation in a barely growing market.
Vollmer suggested that these proposals may be based on populist sentiments rather than facts, and he cautioned against the one-sided pressure on costs on intermediaries, stating it as short-sighted. The BVK is also critical of the timing of these proposals, suggesting that they are not being given a fair hearing during election times.
The analysis by BVK shows that intermediaries are typically not high earners. In fact, almost half of the intermediaries would earn more as an employee in an insurer's in-house department, according to BVK figures. Shrinking intermediary numbers, lack of successors, and an aging intermediary population are the visible consequences, according to the analysis.
The BVK is concerned about the proposals for commission bans and fee-based advice due to their attempts to shed advisory and support duties. Vollmer stated that a glance at European neighbors could debunk these proposals as populist and unsupported by facts. The BVK warns that these proposals could be unrealistic and potentially harmful to the insurance distribution sector.
In summary, COVID-19 has highlighted the need for insurers and distributors to close coverage gaps, adapt commission models amid evolving product demands, intensify competitive differentiation, and leverage market conditions and consumer engagement to foster growth across insurance sectors. The BVK's concerns over proposals for commission bans and fee-based advice underscore the importance of maintaining a balanced approach that considers the long-term health of the insurance distribution sector.
References:
[1] BVK Analysis, December 2020 - March 2021 [2] Vollmer, A., BVK Vice-President [3] Insurance Market Reports, Q2 2025 [4] Insurance Awareness and Accessibility Reports, 2021
In light of the changing landscape in insurance distribution due to the COVID-19 pandemic, insurers and distributors are reassessing their product offerings and commission structures (Other, finance, business). The increased competition to offer more comprehensive and attractive products has led to innovation in digital platforms, but concerns have arisen about proposals for commission bans and a switch to fee-based advice, which could be detrimental to the insurance distribution sector (Other, finance, business).
