Become the commercial insurance producer of the future

By 2030, producers will operate in fundamentally different ways, due to shifting client needs, tech transformation and new product offerings.

Drew Federico, Senior Manager, Ernst & Young LLP, Jeremy Spier, EY Americas Strategy and Transactions Insurance Leader, Mikhail Raybshteyn, EY Global Financial Services Tax Partner and Captive Insurance Services Co-Leader, Sacha Munro, Senior Manager, Ernst & Young LLP, Steven Kauderer, Principal, EY-Parthenon, Ernst & Young LLP contributed to the article.

In brief

• The increased emphasis on client relationships and advisory services will fundamentally change compensation models for producers.
• New offerings –products and services – will provide the protections clients need, help close the coverage gap and unlock growth for producers and carriers.
• Intensifying regulatory scrutiny – and the resulting spike in compliance costs – will trigger a wave of consolidation and acquisitions.

Trustworthy. Transparent. Technology-enabled. These will be the primary attributes of tomorrow’s most successful commercial insurance producers. The carriers with the strongest producer relationships will embed these qualities into their business models, day-to-day operations and organizational cultures to achieve more profitable growth and increase market share.

The rise of GenAI will only raise the stakes surrounding trust and transparency for commercial insurers since many clients may not trust insurers to use AI in beneficial ways. Producers and carriers that deploy AI transparently, responsibly and in ways that are advantageous to clients (e.g., helping them identify emerging risks and optimize their insurance spend) will strengthen trust. They’ll also benefit clients by matching protections and services for their unique risk profiles.

GenAI will transform the role of brokers, but it won’t replace them. Indeed, the most effective deployments of GenAI will feature humans in the loop. Though basic tasks for initial submissions will be handled primarily by bots and copilots, producers or their staff will review them and validate their accuracy.

Five formidable shifts in the commercial insurance landscape will transform the role of the producer within the next five years.

1: When GenAI cuts quote-to-bind timelines by up to 75% and reduces pre-submission interactions by 50%, brokers will compete based on specialized knowledge, meaningful insights and the ability to tailor protections.¹

By 21st-century standards, commercial insurance brokers spend far too much time gathering, validating and adjusting data to submit complete and accurate submissions to insurers. Smart, GenAI-enabled tools and processes can optimize key links in the value chain and free producers to spend more time engaging new prospects and expanding existing relationships. Specifically, GenAI will automate data capture and provide insights into the leads and opportunities most likely to convert, enabling brokers to boost their win rates by up to 40%.

Source: EY Analysis

2: With 400,000 open jobs for producers and 50% turnover in the next five years, producers will seek new forms of talent from non-traditional sources and embrace creative recruiting and retention strategies.²

It’s not news that the commercial insurance industry faces a major talent shortage in the coming years. Fundamentally, producers will evolve to become trusted advisors, offering strategic consulting services in addition to connecting corporate clients and commercial insurance providers. The most successful and trusted producers will be embedded within their clients’ organizations, engaging directly with senior leaders and business executives to help identify, model and devise strategies to manage enterprise risks.

Today, brokers are looking for well-rounded individuals who are tech-savvy, data-fluent and creative in problem-solving. Training and development programs should concentrate on building analytical skills to and detailed knowledge of specific market niches. New sourcing strategies will be part of the solution to the talent gap.

Source: EY Analysis

3: The increased emphasis on client relationships and advisory services will fundamentally change compensation models for producers. 

For decades, commercial insurance producers have been paid primarily via sales commissions. By 2030, compensation will look dramatically different. As all levels of the market evolve toward large commercial models, traditional commission-based compensation will be replaced by higher base salaries, standardized service-based fees and richer benefits packages. Performance-based bonuses and other incentives on top of salary and benefits will also be used to retain top talent. Because producers are doing fundamentally different jobs, it makes sense that they’ll be compensated, rewarded and recognized in different ways.

4: Innovative new offerings – both products and services – will provide the protections clients need, help close the coverage gap and unlock growth for both producers and carriers. 

Market megatrends, evolving risk profiles and widespread underinsurance are forcing a period of considerable innovation in commercial insurance. New types of policies will reflect the realities of 21st-century businesses, including cyber threats, climate change, globalized supply chains, digitized operations and the preponderance of intangible assets on most corporations’ balance sheets. Today, many of these risks are not covered. All stakeholders benefit from product innovation. More efficient placement and more precise pricing result from well-designed products. Brokers get stronger client relationships and carriers can identify profitable niches to grow their business. This is a major improvement over the old-school model of choosing the least expensive coverage option from a few generic proposals.

5: Intensifying regulatory scrutiny – and the resulting spike in compliance costs – will trigger a wave of consolidation and acquisitions. 

As the insurance industry evolves, the regulatory landscape will, too. The current trend toward broader oversight of more parts of the business – including data privacy, consumer protections, cyber security and operational resilience – will surely continue. In many cases, significant investments in new technology and meaningful process changes will be necessary to achieve compliance. Only large organizations will thrive in such a complex and expensive regulatory environment. Smaller brokers will struggle with rising costs and the difficulties of delivering the information regulators expect.

A special thank you to the following EY executives for their valuable insights:

• Cara Methvin Boyd, Partner, Ernst & Young LLP
• Jim Bulkowski, Senior Manager, Ernst & Young LLP
• Avril Castagnetta, Executive Director, Ernst & Young LLP
• Michelle Collignon, Executive Director, Ernst & Young LLP
• Sanket Das, Senior Manager, Ernst & Young LLP
• Joel Junkans, Partner, Ernst & Young LLP
• Vanessa McElfresh, Senior Manager, Ernst & Young LLP
• Michael Meleta, Senior, Ernst & Young LLP
• Emily Montgomery, Manager, Ernst & Young LLP
• David Moorhead, Executive Director, Ernst & Young LLP
• Dawn Nash, Executive Director, Ernst & Young LLP
• Chris Raimondo, Principal, Ernst & Young LLP
• Hanif Sidi, Principal, Ernst & Young LLP