If I'm not mistaken, the first time I encountered the word “disintermediation” was in 1997. At the time, I was covering the corporate travel and meetings industry, and the term was used by a self-styled “tech visionary” who was predicting the imminent demise of agents and brokers who handled corporate-travel business.
The web, it was explained to me, would allow a vice president of marketing to book the block of hotel rooms he needed for that critical sales meeting. Or the head of business development could arrange her own special-event space for a multi-city product launch.
The guru turned out to be…pretty darn wrong. In my years reporting on this market, I established good relationships and have remained in touch with many of these agents and brokers who were supposed to quickly go extinct. But here we are 14 years later, and almost all of them are still quite prosperously in business.
The reason is that securing 500 hotel rooms is actually no easy assignment. You have to negotiate a rate—and know what's fair. The hotel's group contracts are inevitably long and complicated—and filled with unfriendly clauses that a savvy travel expert can have excised. Then there's the fact that some hotels have a strong appetite for a certain type of business at a certain time of year—the knowledge of which can be essential to placing the business.
Of course, the web did disintermediate untold numbers of “personal lines” travel agents—those who were providing little or no service over and above connecting a solo traveler with a hotel room or airplane seat—a once-difficult task that has become a super-simple transaction online. But even in the personal-travel space, those creative agents who have established themselves as specialists in a particular niche—offering hard-to-come-by insight on, say, cultural travel in South America—have continued to thrive.
You see where I'm going with this. The fate and future of travel and insurance agents/brokers are pretty obviously analogous. Personal-lines insurance agents with little to offer beyond a quick quote and a brief hello are a species with a gloomy future. Those who really get to know the unique risks of their clients, and can develop custom solutions for them, can expect to stay busy for a long time to come.
And as complex as commercial-travel deals can be, they are a lot less involved than arranging the right insurance coverage for even a small business and its big list of unique risks (many of which the owner/executives might not be aware of). The web is an enormously powerful tool (understatement of the year?), but it can't transform a CFO into an insurance expert overnight—nor can it substitute for the acumen/access that a wholesale specialist can bring to a line of business that a retail generalist might only see once or twice a year.
We explore one small angle of this buyer/retail/wholesale/web equation starting on page 12 in Chad Hemenway's article “New Options Emerge On The Specialty Distribution Road.” And I know this issue of the web's impact on commercial-lines distribution—a question of existential importance for many—is one we're going to be revisiting time and again in these pages.
Brokers and agents, let me know your thoughts about the Internet and intermediaries—does the web have you losing sleep, or are you sleeping like a baby?
Bryant Rousseau
Editor in Chief
201-526-2329
[email protected]
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