As we look over the topics we have covered in this space, it occurs to us that the brokers might be getting hit with more IT than they expect over the next little while. We’d like to know what you think, and, if you are part of the broker distribution value chain, what, you think needs to be done. We do have one suggestion.
Our bias here…..
We are big fans of brokers. Brokers tend to punch above their weight when it comes to creativity, resilience, and business savvy. And, in spite of their fierce independence, and competitiveness, they can come together quickly and effectively to defend their own interests as well as those of their customers, and (yes, really) their insurance company partners.
And they can be a lot of fun.
That said, it’s not easy being purple* ….
In a hard market (if you don’t know what this means, ask someone with grey hair), brokers have to work hard to maintain coverage for their clients at reasonable prices.
In the current market, brokers have to work to maintain their client base from competitive attacks by direct writers, captive agents, and fellow brokers. And do so with a revenue stream that ranges from steady to decreasing.
Meanwhile, brokers have to retain talent (good producers and CSRs are always in demand), deal with non-revenue generating activities (endorsements, claims), and meet the demands of insurers and shareholders/partners/other stakeholders for ROI and (yes, really) growth.
Good brokers do all of this and more. Many product enhancements and new covereages are broker driven.
Where does IT fit with brokers today?
Driven by client service and internal efficiency, leading brokers were early adopters of office technology. By the end of the 1970s, a critical mass of brokers had purchased large (for the time) turn-key broker management systems (BMSs) to handle client and accounting management. By the end of the 1980s, these systems were into their second and third generations.
Brokers also drove development of standardized connectivity between their offices and multiple insurance companies. We’ve written extensively on the history of broker connectivity and our thoughts on next steps. Suffice it to say that while no-one is really satisfied, there has been a lot of progress.
So, in addition to running the business, the broker has to commit cycles to using/supporting/maintaining/replacing complex systems. In general, when a broker’s staff count gets to 10 or more, someone in the office will be spending more than 50% of his/her time on technology.
The next generation of technology doesn’t fit in easily ….
Here’s some of what’s happening now and what could be coming for brokers:
Social Media – This is more than a fad. And it’s more than Facebook and Twitter. Increasingly, consumers want to use they media they are most comfortable with and expect that suppliers will keep up. Earlier this year, we posted on this.
Telematics and the Internet of Things – Most brokers have heard about Telematics/Usage Based Insurance. The Insurance Brokers Association of Ontario is developing a broker owned facility – IBRI – which will offer brokers an option. However, other insurers will have their own solutions and other risks (property, commercial) will be increasingly monitored by electronic sensors. This “Internet of Things” will drive underwriting/rating, claims, marketing data. One outcome is that brokers will have a decreasing ability to supply quotes from their existing technology.
Big Data/Analytics - Insurers are expanding use of sophisticated analytics engines to work with Big Data for claims, underwriting, marketing. While most brokers will not have the need or ability to have parallel systems, they will be required to understand and speak the same language as the insurer.
Customer Relationship Management (CRM) - Previous generations of customer database tools focused on the individual/family/business at the centre, with other elements – including insurance – as relating to one entity. The more modern approach – required in our more complex data driven world – puts no one at the centre, but describes links based on relationships. This is critical for the more sophisticated personalized marketing that is becoming a competitive differentiator with organizations such as Amazon.com and Google.
What to do?
For many brokers, the principal will be increasingly challenged to be the Chief Information Officer for her brokerage. This requires a working (not necessarily technical) understanding and an ability to sort out the real opportunities, and attendant costs/efforts, for the brokerage.
We think that targeted education is key. Insurance-Canada.ca is hosting Insurance2024, an executive forum on October 7, 2014 in Toronto which will bring experts to help insurer and brokerage executives understand trends for the next decade, and focus on key elements.
Take your future in your own hands. Reduce the overload. And get back to having fun.
* Purple is the colour used in the Broker Identity Program