Brokers see rapid digital change as a major challenge for the channel

From accelerated digitization to the implementation of agentic AI, the technological landscape is changing. For brokers, it’s perceived as a strong challenge for the distribution channel.

This year, a full 50% of respondents to Canadian Underwriter’s 2026 National Broker Survey identified rapid technological change as a strong challenge to brokers. That number is up a staggering 12 points over last year, by far the largest jump in the findings.

It makes rapid digital change the fourth-largest challenge among 13 challenges presented in a list for brokers to rate.

Gravitating to online options

“In an era of seamless digital commerce, consumers are looking for speed, simplicity, and convenience,” says Insurance Brokers Association of Canada CEO Peter Braid.

Consumers have different perspectives on how they like to buy things and some are very comfortable buying online, adds Insurance Brokers Association of Ontario CEO Colin Simpson.

And then there is the rise of a generation of digital natives to service.

“There’s a younger demographic that’s all about convenience and speed expectations: instant quotes, 24/7 access, and mobile-first experiences,” says Karim Mouait, president of the Insurance Brokers Association of Alberta and of Cornerstone Insurance Brokers Ltd.

And that partly folds into a separate concern that these consumers may slip away from the broker channel.  

For example, tech-savvy consumers with simple risk profiles can work through the consumer path of a direct very easily, as Insurance Brokers Association of BC executive director and chief operating officer Julie Skelton explains.

Attempting to tackle technology

Not all brokers are positioned to compete in the digital arena. “Smaller businesses looking at huge investments in technology will find it difficult because they can’t invest millions of dollars,” says Simpson.

Directs can run with higher efficiency and lower margins. This makes it more likely that large brokers and digital brokers will have the scale to compte with directs in digital offerings, brokers tell CU.  

“For some smaller brokers,” says Mouait, “the owner wears five different hats and team members have multiple interdepartmental roles, so they may not have the level of tech sophistication needed to get a younger demographic in the door.”

AI may also be magnifying the digital threat. It is easier to bolt on agentic AI, telephonic AI, and chatbots dealing with the consumer directly with a direct-to-consumer model.

Addressing the inefficiencies

As a first step, brokers should ensure they have an appropriate broker management system (BMS) in place to serve clients. And broker associations are continuing to advocate for improved connectivity and data exchange.

Braid says the proposed API Gateway connectivity solution announced in the Centre for Study of Insurance Operations (CSIO)’s latest strategic plan is a game changer. “It will eliminate the dual entry process and significantly improve the consumer experience, so we need to see that vision realized.”

“You’ve also got to remember the state of digital is very different in regions across the country,” says Simpson. “Not everybody has access to a 5G network. Many people still transact in person in rural communities without that digital infrastructure.”

As for AI, Mouait admits there is a proliferation of its use in the direct channel. But it’s also a benefit to brokers owning the client relationship.

“I believe you’ll start seeing some pushback [on purely AI-driven service] at some point,” he predicts. “People will double down on having that human connection and being able to call someone they’ve had a relationship with for the last five years and can refer people to instead of being serviced by AI.”

Anticipating the inevitable shift

That personal aspect of the value proposition is critical, perhaps especially for smaller brokers, brokers tell CU. Individual relationships, service, and advice are important, and key to ensuring the right coverage is in place for the consumer.

As for the younger demographic, a shift seems inevitable. “Eventually,” says Mouait, “they’re going to need complexity as they acquire more assets, including the major generational wealth transfer currently underway that is beyond the direct-to-consumer model.”

Occupancies have changed, too. People living in multiplexes, duplexes and fourplexes are moving into shared and student accommodations. More people work from home or have home-based businesses.

That requires a more holistic view of home insurance, for example, says Skelton. “A broker finds solutions that fit the consumer rather than forcing the consumer into a direct bucket.”

Commercial lines seldom fit a direct, automated model, adds Simpson. “They’re harder to underwrite and price. They take more time and effort.”

Ultimately, says Braid, consumers will continue to choose how they want to be served. In his view, however, “there will always be a place for community-based brokerages where personal relationships matter.”