Who Takes Over? The Future of the Broker Market.

00:00:21: Welcome to a new episode of Love, Tech and the Future Of Insurance.

00:00:26: An entire generation of German insurance brokers is retiring with them.

00:00:31: decades-of client relationships are quietly leaving the market often without anyone to hand them over too.

00:00:38: at The same time private equity is consolidating the broker market at a pace it has never seen before.

00:00:45: Independent advisors are being absorbed into ever larger structures And the market is concentrating in fewer and fewer hands.

00:00:53: And somewhere in the middle sits the client.

00:00:56: rarely asked, my guest today decided to build the infrastructure.

00:01:01: this market is missing.

00:01:03: I'm pleased to welcome Maximilian Würz co-founder and managing director of Polissen Transfer Germany's first digital marketplace for insurance portfolios.

00:01:14: with more than a decade experience an insurance Max has built his career around optimizing digital business processes in the broker market.

00:01:24: He also serves as an active member of the Bepro Market Committee, that is the industry body responsible for standardizing data exchange across the German insurance market.

00:01:35: Today we talk about what it takes to create a market where there wasn't one before.

00:01:48: Let's dive in and challenge a little bit my intro.

00:01:52: Would you share the view that I've alluded to?

00:01:56: And if so, is this potentially the reason why police and transfer actually exists?

00:02:01: Yeah several triggers on the market but i can confirm it what we just mentioned.

00:02:06: there are lots of activity over the last one or two months Lots of consolidation going on.

00:02:13: Of course also our user group isn't getting younger.

00:02:17: Often you have a lack of young talent.

00:02:20: There's some gap in the market, so yeah I could confirm that.

00:02:24: if this is one of the reasons maybe You can share also which were other reasons?

00:02:28: That technically got you into This particular market.

00:02:32: In my case as mentioned i'm an industry for couple of years and Yeah, we saw that problem in one of my previous roads And I Also seen it there no within manual filling gap in place.

00:02:48: I just saw the opportunity and then started to venture post-COVID era, And I would also say that COVID was some kind of enabler for debt business because before it mostly over a personal exchange during especially this period you couldn't meet in person.

00:03:07: so we needed some digital way to interact especially if they're like civil parties involved.

00:03:14: Often we have not only the broker and a key account manager in place, often also the underwriters of the risk carriers.

00:03:22: that's what also developed it where more underwriter was on our

00:03:26: boat.".

00:03:27: So you are connecting these three elements?

00:03:29: For me there is also The Fourth Player which has private equity And the consolidation That They Are Undergoing.

00:03:34: I believe this usually sold as an efficiency gain But from client perspective Is It Actually Progress Or is the market quietly losing something it won't get back?

00:03:45: It's a good question.

00:03:46: As we just mentioned previously, there are lots of consolidation going on in the markets but they're also pretty big.

00:03:52: so you have about forty thousand active insurance brokers and I think private equity mainly focuses on top five hundred dollars one thousand brokers.

00:04:04: you have also lots of smaller broker still in the market and of course they're also need a way for succession planning an often there just too small for private equity.

00:04:13: Maybe that will change if the private equity companies are so focusing with their brokers.

00:04:20: stay just acquired on smaller brokers because often smaller brokers only can take over if you go for example when as it deal, And often also the smaller brokers, they are having a large private client customer base.

00:04:36: Often there's also personal relationships or you need all sort of local hub in that area and it is what most of the private equity backbrokers telling me if they're going into field day work with local hubs.

00:04:50: So customers still want to preserve activity?

00:04:54: We will be able dive more detail as we go through our episode today.

00:05:00: But just to ensure that everybody technically understands and you've highlighted already some of the elements associated with a German market, forty thousand brokers private equity is consolidating the five hundred largest ones.

00:05:12: there's this course still tremendous room.

00:05:14: we have I believe also close to five hundred insurance companies in total, right?

00:05:19: So it's a tremendous diverse market and at the center is that customer.

00:05:23: That still requires the local hub.

00:05:26: if nothing changes then we continue with the pace that we currently see In ten years.

00:05:31: what would be German Insurance Market look like just together?

00:05:34: bit of an outlook

00:05:35: I think.

00:05:35: what is also growing quickly right now, it's the area of MGA in Germany.

00:05:40: What we are experiencing is that especially like for private life insurance you have more MGAs in place because a larger carriers.

00:05:47: they just say okay We're focusing maybe on direct business with focusing on the commercial lines.

00:05:54: We focus on business insurance from certain levels premium but all the private line customers working with MGA is because it's just far more efficient and we want to also reduce the level of risk there.

00:06:12: So, we're having like someone partnering with us.

00:06:15: that's something which has one more coming?

00:06:18: Totally right!

00:06:18: We forgot the MGA so... The listeners are not aware what an MGA Is Something between a broker in the insurer Because you acting on behalf of the insurers signing those risks but technically independent providing the best service for your customer, a model that has been tremendously successful in U.S.

00:06:37: market as well as in the UK market and of course we have also very specialized market here in their private lines predominantly.

00:06:44: That could be an additional player who is creating consolidation activities on this particular field.

00:06:50: Going back to question so where do you see us being ten years out-of-your perspective?

00:06:55: Because I'm anticipating in ten years you will dominate.

00:07:00: Yeah, I think it's like a challenging question especially if you also look at what is happening right now in the area of tech with AI.

00:07:08: So on our field its really helping us and helps to streamline processes because we have several manual tasks for brokers.

00:07:18: AI agents are also enabled by standard broker.

00:07:21: maybe not every task but lots of tasks.

00:07:24: You will be able manage much more risks And that's also something which traps the German broker market, because the number one topic or point brokers are always highlighting to us is their lack of staff in last couple years.

00:07:42: Especially development helps also to fill that gap and work more efficiently on core businesses for a broker make-the-business as well as manage business and AI agents helpful enabler to also optimize here the entire value chain.

00:08:01: What we're saying is it's not clearly visible what will be in ten years from now, but there are so many elements that are currently impacting that market – technically a lot of movement and uncertainty… And you need to navigate with clear sights and make tactical decisions based on how the market changes in terms of dynamics.

00:08:21: AI is an additional driver that is to a certain extent accelerating certain things, but also potentially a threat for other things.

00:08:29: We need to wait and see how this plays off whether you can really take benefit of it.

00:08:34: in order to make even more specific if we look into the technical challenge I would think that the most complicated part is related around data in general.

00:08:48: Would you confirm this as one of the biggest challenges and can based on your experience tell me why has it not been solved over the last twenty years?

00:08:57: Yeah, i can agree with that.

00:08:58: Data collection or data management are main tasks for the most challenging ones.

00:09:04: there's several initiatives in a German market which was mentioned previously a member of the BIPRO committee, which is standard in German market to exchange data between insurers and brokers.

00:09:17: But I think also risks are changing And also requirements on data are changing.

00:09:25: ten years ago Some insurance carriers did not even needed year-of building.

00:09:30: Now they need to have really detailed data for certain buildings because there had lots natural disasters So of course, interest and insurance.

00:09:37: they're always learning.

00:09:39: It's just getting more difficult to underwrite And you also need more data To get a risk coverage on certain risks.

00:09:47: That means when you start such project You see the starting point from a data perspective.

00:09:52: It is not only missing quality, it's also missing fields.

00:09:56: It is missing essential elements that you need in modern underwriting systems which were not collected in the past.

00:10:03: Guide us a little bit through what really bad data if we look at this?

00:10:06: Give us some flavour of what is regular and what is bad or what is really bad.

00:10:10: It isn't just about bad data but sometimes there are outdated data.

00:10:14: We often get data from risk reports which have been old for three years which are quite outdated from an underwriting perspective.

00:10:21: You don't want to underwrite that if you have outdated reports.

00:10:25: and when it comes to bad data, I mean just mentioned a few building insurance and its for example missing what's the purpose of debt-building?

00:10:34: It is privately used as business registered And if so Which kind of businesses register?

00:10:40: a normal hairdresser or is it manufacturing business, for example?

00:10:44: And that's also tremendously changing at the risk of insurance carrier.

00:10:48: They need to know because sometimes you insure an office tower maybe have a kiosk downstairs but we could talk about an office like laundry inside which has completely different risk category and then some times as risk carrier cannot even underwrite building due to this kind of risks in only one business.

00:11:10: I think there is no, in general like bad data.

00:11:13: What you can always do is improve it and we are also doing that if the broker wants it.

00:11:18: We enrich data on for example building insurance... ...we give buildings a number of levels in the building or we can also give information under roof structure which sometimes quite important, especially in a coastal area or if you're an mountain area.

00:11:38: You also can read it in the press that often the special building insurances are loss-making business just because of age of buildings and claims And when it comes to claim settlement costs really tremendously increasing.

00:11:54: They once have lots data so they can quantify their risk.

00:11:58: We hear you're talking already about the solution and Max, do determine how much you want to reveal out of the secret source that you guys are using in this particular field.

00:12:07: But as far as I understand your receive let's not call it bad data but incomplete data or outdated data And You Are Able To Make This Data Quite Beautiful!

00:12:17: Your able to prepare brighter groom for this particular type Of Job?

00:12:23: Tell us How You Do That Because You Have Very Fast In Doing It.

00:12:26: How do you approach these things technically to solve and be so valuable then for the receiving end?

00:12:32: What we developed over the last eighteen months, it's like a data automation pipeline.

00:12:37: With that Data Automation Pipeline We screened the data, we structureized our data And we identified gaps which are necessary For certain lines of insurance.

00:12:50: If broker wants can fill their gaps with data mainly in building insurance and also in housing insurance, also in car insurance.

00:13:01: We have several external data provider.

00:13:05: with these data providers we are partnering and connected external APIs.

00:13:12: based on that we fill the gaps to generate complete data.

00:13:16: at the end of day it's helping us because our core business is the tender of insurance portfolios.

00:13:23: So we want to run successful tenders, that transfer's also working afterwards.

00:13:29: We are like a young company so we're always learning especially in early stages.

00:13:33: often...we run tenders but then the data's incomplete and we have had some brokers they even call all their customers to ask about age-of-the-building or square meters And that is what we can take over.

00:13:50: Also when it comes to lack of talent, I mean in the past also when it come to risk areas most of them broke us.

00:13:57: they always did manually and like a tool address to get risk area.

00:14:03: That one will do any more manually which are getting their addresses.

00:14:08: We have this data automation pipeline where you can enrich data

00:14:12: The core solution as a Data Pipeline that operates with external sources, you can embed through API.

00:14:19: You have the ability to scan data provided by you I would anticipate in all kinds of formats because how the broker maintains it is from a proper system down to a system for records or even paper and then basically able take it based on wishes of customers into completely new level of quality.

00:14:44: that enables then processing, evaluation additional risk potentially also.

00:14:48: Evaluation of additional business associated with it was not seen before?

00:14:53: That's correct yeah and for example last month we also did like a screening off building portfolio.

00:14:58: but what you can do is check the buildings if they have any solar systems on their roof And often the broker not even knows about it.

00:15:09: A customer, they're just adding a solar system on their roof and they don't inform the broker in an insurance carrier.

00:15:16: Then that's not ensured.

00:15:17: but what we are doing is we can also enrich debt.

00:15:20: We give to brokers with debt enrichment some kind of trigger so he can approach his customers based on additional risk as well as providing an end-of-the-day... coverage for that asset on the roof.

00:15:37: Those data providers you're using, would this have been available five or ten years ago?

00:15:42: Or is it all?

00:15:43: geodata has now reached a level of quality which can be used in these processes?

00:15:48: It's geo-data but also business data and especially when it comes to business data as just got developed over last couple of year often there are public sources some things they really enable us, but I think there's still a long way to go because lots of attributes.

00:16:11: We would love to get even better sets of data.

00:16:15: But one is also what we always give as feedback for our data providers which kind of data that we'd like to see?

00:16:22: Because the insurance underwriters are getting more restrictive and with more data you have You can analyze and process and fill out all your gaps.

00:16:32: And also, if insurance underwriter like a better view on the risk.

00:16:36: That's so interesting that we need to build this in a platform which is type of autonomous and external.

00:16:43: What I hear is you're just listening to your customers in both ends of the spectrum, and you're connecting the dots.

00:16:49: And then applying that also to your suppliers and saying this exactly what we need which a reflection on market requires.

00:16:56: it's nothing that you are inherently coming up with but its just... You listen understanding by putting things together create demand from their end.

00:17:04: Then through your technical platform, you can also solve it because you listen to all of them and get the elements included.

00:17:11: Which is a fantastic way for providing value in this industry!

00:17:15: You always learn with customers that geodata are changing.

00:17:20: They have released once per year every first week of June... ...and actually they should do such a check on their data once or twice a year.

00:17:28: Some of our customers say hey great we could update the data every year.

00:17:34: Often they cannot do it on their end.

00:17:37: They don't have to take know how.

00:17:38: the most insurance brokers, and that's another software company And of course there we love to help also in other lines of insurance.

00:17:46: We started with a private line insurance sector and then step-by-step Brokers came towards us.

00:17:52: which car fleets?

00:17:53: Did you come to us?

00:17:54: would go insurance today say I need capacity like thirty percent someone needs to cover it In the end of the day be doing an digital efficient tender which is fully compliant.

00:18:06: We can help them to solve lots of problems, I'm sure also in the next couple years.

00:18:11: new things are coming up and we're always open.

00:18:14: even expand further our product get that field more into digital age getting less dependent on talent in Germany.

00:18:26: We've spoken about the carriers and individual parts but you're providing a tremendous value If you always had your policy running and you never checked whether there's a better price, where the risk profile has changed.

00:18:38: And now you could get an even better insurance by lifting all these elements.

00:18:42: in providing these standards of moving everything into more modern structure.

00:18:46: You're providing more transparency but on the other hand also opportunities for them to really evaluate their risks properly and potentially also lower premiums.

00:18:56: Yeah, lower the premiums are also I would say Just covered the current risks.

00:19:00: We had it last month, we have a large household insurance portfolio and all these contracts there were ten to fifteen years old.

00:19:09: nowadays in Germany as every second person has an expensive mountain bike or e-bike often they are not even insured in their house at insurance and new products.

00:19:18: sometimes they haven't combined up to ten thousand euros for such a bike which was not the case ten or fifteen years ago.

00:19:26: And of course, products are getting developed even further.

00:19:29: so it also helps to customers just get covered at latest risk and have better coverage for their important valuables.

00:19:38: So you're closing the protection gap?

00:19:39: I mean in end-of-the-day is a task on insurance broker to ensure that this client has always the latest coverage with current market needs.

00:19:49: I think that we also have a structural element which is related to the fact You don't

00:20:21: also have that broker which is only like commissioned figured or focused.

00:20:26: And some other brokers, they will purely focus on that.

00:20:30: and of course the commissioners are important point especially when it comes to private equity and to lift efficiencies.

00:20:37: if you have very low claims ratio there's a question okay how do Divide the profits.

00:20:45: The broker is doing a good job or maybe also even offer customers to have like an extra renewal, no increase but yeah, generated broker it's awesome thing which will come and which are going to strip market may be not in next three months.

00:21:03: I'm sure on the next twenty four to thirty six month there will be a tremendous change, especially when it comes also in integration with CM systems which our brokers are using and sometimes even getting provided to brokers over broker pools for example.

00:21:20: That one is going to change the market a lot I guess

00:21:24: Since we're still on this solution.

00:21:25: just another question that's interesting.

00:21:28: We spoke about the platform, data ingestion part.

00:21:32: We spoke about the API.

00:21:34: You mentioned that AI is helping to optimize some of the processing, are you exploring AI adaptations and other areas off the platform as well for your business model?

00:21:45: In our area we have lots of things where not only solve with AI but we can optimize it over AI agents.

00:21:53: when it comes to customer care with deconseling systems just basics which has talked about data optimization, structuring.

00:22:03: We have local AI agents doing that job in the data automation pipeline.

00:22:08: but I think also when it comes to provide after sales support for brokers or even insurers or MGA's there we can use our agents and we like using them especially when it come to interactions with insurance carriers also to identify their risk appetite and the current setup.

00:22:30: So it's really helping us reduce physical meetings or virtual meetings in future, just get some more insights and improve our data model.

00:22:44: The contact center for police and transfer push-and-pull is large extent already completely agentic and able to contact without human interference?

00:22:55: Correct.

00:22:56: Excellent, we've seen that the market is also for insurance carriers moving in this direction but it's great to see there as a practical example here which already supports and encourages us guidance.

00:23:10: Anything you want to mention about the solution?

00:23:12: I have not asked yet?

00:23:15: Before starting with the pure tender of portfolios.

00:23:20: So, to find a new risk carrier is like different reasons.

00:23:24: Outdated contracts also.

00:23:26: sometimes it's not only the outdated contract but its service especially when it comes to claim settlements.

00:23:32: Sometimes there are some risk carriers going out of business or MGA as we mentioned.

00:23:38: so you have everything on our platform To change the current risk carrier.

00:23:43: I mean what we're providing in our platform brokers to sell or buy entire business, or just the pure portfolio.

00:23:54: That one is also really growing over the last couple of years which has mentioned before what happened in ten years.

00:24:00: and if you see a structure after brokers as an average broker I think like fifty-five years old do need some kind of succession planning.

00:24:09: Of course we can't do it If your big enough with private equity company but if your smaller broker and you have maybe a turnover of less than two hundred thousand euros per year, then it's getting complicated because most of these players as I said they want some kind of due diligence with you.

00:24:27: So we need to find plan B And there also can help on our platform.

00:24:31: just run like tender on your portfolio or business, and you can also define specific goals if you still want to be in place for a couple of years.

00:24:42: Or If You Want To Handle It Over Straight Away.

00:24:45: So There We Also Provide An Option On Our Product

00:24:48: Max.

00:24:49: The Entire Solution Is Technically Moving Into Becoming A Marketplace With Everything That Your Telling Us.

00:24:54: More Functions More Abilities.

00:24:56: The Interaction Points between those carriers for different types of events can be carried out on the platform.

00:25:03: That brings me to, let's say a bit more of a strategic view on your solution as well because if you're building that market infrastructure at some point you become a strategic asset for investors or incumbents over in insurance markets itself.

00:25:19: how do think about it?

00:25:20: I would say it's an asset in general and its also an enabler for the parties we mentioned before.

00:25:26: The brokers, insurers especially underwriters taps them a lot.

00:25:30: but We always need to focus on our DNA because we are neutral platform.

00:25:36: otherwise i think that neutral marketplace wouldn't work if you have your major player in place?

00:25:44: The insurance industry loves their players when they become system relevant.

00:25:48: Imagine the market wants a piece of you, how can you stay neutral in that particular way?

00:25:53: It's always about numbers and what customers... And we just had an experience.

00:25:57: it is better to stay neutral.

00:26:00: In the beginning there was some kind of partner page on our website.

00:26:04: We listed six or eight partners because we thought, okay this kind of partners they will help the broker so that it'll help insurers to just give them some guidance.

00:26:15: We didn't have any partner agreement with them in place which has posted on our products.

00:26:19: So if there are certain questions then I can reach out and five or six partners taken over from other companies And also certain market structures come as a result.

00:26:33: They won't work with these kind of companies because they're owned by another company and makes it just like a really big hassle.

00:26:39: So we'll stop referencing on our partner page excluding that, and stay neutral.

00:26:47: Are you planning to move police and transfer into other markets outside Germany?

00:26:52: Or do think there's enough for the numbers in the beginning?

00:26:58: Germany is huge market but definitely open for other markets within Europe or also I would say like EMEA, Europe and Middle East because our business model you can adapt in any market where you have a very strong broker distribution channel.

00:27:16: We already did the market analysis.

00:27:18: on that we had some talks at Netherlands.

00:27:21: Austria especially Netherlands is really interesting.

00:27:28: Also, it's not in terms of only markers also.

00:27:30: In terms of services or product we still can expand that.

00:27:34: And what I say, we're just always getting guided from our customers.

00:27:39: Maybe one day also one of our customer says okay you should go to a certain market and solve the problem as well so that they are quite open?

00:27:47: You need a saturated market because it's predominantly relevant with a great broker presence.

00:27:53: but in the beginning when an aging market is complicated for succession there isn't additional type of driver or would to Germany and not applicable to other geographies?

00:28:07: If you look at the area of PNC, in most of the PNCE insurance contracts they're having like a duration of twelve months.

00:28:15: So it's only an outdated contract.

00:28:17: could be also in terms of service or pricing that a broker wants to change Or even if we have larger corporate customers who need to act fully compliant.

00:28:29: And they are also, for example in the Middle East interesting fields.

00:28:33: if you come into employee benefits.

00:28:35: For group accident insurance or look at company health insurance which is in certain markets even mandatory that their employer was providing them.

00:28:45: it's also a very interesting field for us where we'd like to expand.

00:28:49: maybe

00:28:51: We've spent this conversation talking about the markets and inefficiency, slow to change.

00:28:57: And yet at the name of our podcast is Love Tech in The Future Of Insurance.

00:29:00: so what keeps you hooked?

00:29:04: What keeps me hooked on that?

00:29:05: industry or customers' broker's?

00:29:07: insurance?

00:29:07: always something new coming up with new risks are coming up some thing I was never thinking about.

00:29:13: You Always Learn Something New.

00:29:15: That's why i love also insurance.

00:29:17: there're many different kinds of insurance things you can insure, where you never thought about it.

00:29:23: And which gives me driving that we always provide solutions to brokers or to insurers.

00:29:30: so those are the main points.

00:29:32: Max this has been a fascinating story that you have to share not only in terms of the solutions that you find for something that seemed unsolvable and this particular market but he's also given us some great tips on Where We Can Invest and Start To Build topics ourselves and consolidating some of the smaller players.

00:29:51: It clearly highlights that there's a lot happening in this market.

00:29:54: for those who thought invention innovation is difficult to achieve, you're living an breathing example of change coming fast and solving topics to serve at the market as well as the customer.

00:30:07: I would like thank you for joining us.

00:30:09: we wish it great success with police and transfer in Germany wherever you take.

00:30:14: Thank

00:30:16: you.

00:30:17: That was it, a lot of elements that we can pursue and things.