By Douglas W. Grant, CIP, Principal, Insurance-Canada.ca
Reprinted with permission from “Alberta Broker”, April/May 2001
What might a broker look like in the not-so-distant future?
At one end of the spectrum sits a team of people serving a broad array of asset
management, growth and protection products to a local community. Some contend that being
many things to many people is impossible; others that such a mandate will give a broker a
A broker supporting a broader product will be enabled by
the Internet – a combination of computing and communicating tools. The Internet in our
offices is not only a prerequisite to this future; its evolution represents an interesting
parallel to the changes in this business.
The first instance of computers with business users came
with dumb green screens locally connected to “The Computer”. The ease of use of
a graphical Windows interface required a personal computer at the workstation – because of
the economics. But the pendulum swings back once again to simpler access devices with most
or even all processing on the server. And, this centralization enables local desktops,
outside web browsers, and wireless mobile PDA’s to each process the same business
transactions. Communications and computer costs have decreased while speeds have
increased, and the economics now give you more choice.
Not only have access devices and LAN’s changed. Even
recently economics, speed, and reliability dictated that remote offices had their own
server. Then faster cheaper communications enabled server consolidation with one serving
many locations. Today some have moved their servers right out of the office to Managed
Operations firms. Others are farming out selected applications to Applications Service
Providers (ASP’s), who specialize in running such environments. Today computer
manufacturers are building application-specific servers for such things as e-mail, web
site hosting, data analysis etc. Tomorrow one of your people, using a variety of your
applications, may “touch” servers housed internally or networked across any
number of providers, with the user unaware.
In the same way that a user may access functions on
different servers, one application may in turn invoke processing or data from applications
on servers in other firms. Unlike yesterday’s insurer and broker environments which had to
be standalone, and in so being had certain overlaps and redundancies, tomorrow will
increasingly bring linked computers, applications and processes – and “straight
through processing”. The CSR with a prospect on the phone does a comparative quote of
several products. Rather than being done on the CSR’s computer, or the broker server,
tomorrow this may well be done by sending the data to each market’s rating engine at its
location, and consolidating the results for presentation. Once a particular product is
selected, a request for guaranteed price will be processed by that market’s computer
system, including validation against prior claims and MVR databases, in an auto example.
If your broker system is extended to a prospect over the Internet, this one
“comparative quote through guaranteed price and issue” process could have
involved computer systems in a half dozen or more organizations and a live conversation
with a broker CSR to resolve a question. At the end of the business transaction, the
Broker Management System and Insurer system are updated. Changing economics, quality of
service improvements, competition within the industry, consumer expectations and
technology have all contributed to these innovations. As this article is being
“penned” (now that is an anachronistic term!), the CSIO Insurance Portal is
being designed to enable just such capability, and the broker’s choice to include the customer.
Not just transaction processing but the whole set of
supporting processes, from rate manuals to forms, from product education to broker reports
from insurers, are facing similar changes. At an Insurance-Canada.ca seminar on
distribution in February, Alister Campbell of Zurich suggested that the increasing minimum
volumes of the last two decades may start to reverse. The large variable support costs
which drove these minimum volumes are decreasing, and becoming fixed, to the point where
more companies may make more products available to more brokers without volume dependencies.
Even the customer may demand representation of more
products when selecting a broker, or insurance solution. At www.insurance-canada.ca, where
Web sites offering on-line quotes are listed, beside many brokers and some direct writers,
a visitor finds the Kanetix insurance mall, and another service called Consumers Guide to
Insurance which compares some 35 or more markets for Ontario auto. And at
www.term4sale.com, almost all term life
products sold in Canada are named and compared by
premium. The consumer is getting better access to increasing volumes of data.
In addition to representing more markets and more P&C
products, many brokers represent life products. Today Hi-Alta, Royal, Zurich, ING and
others all appear to have projects underway to assist the broker in extending his product
set to include a broader range of financial services, even beyond insurance to banking products.
At the end of the day, the customer will choose. In the
face of vast arrays of data and information, one “value” of the broker is the
consolidation and packaging of information and, based on experience and skill, the
transformation of that information into advice. But each consumer will expect a unique
packaging and transformation to satisfy his needs. Who else but the local broker is best
positioned to determine those needs and provide that package?
Greg Maciag, President of ACORD in the US, is an early
technology adopter, as indicated in his National Underwriter P&C columns. But when
visited by his insurance agent, he realized that intensive Internet research taking
considerable time COULD NOT MATCH the value – based on experience,
knowledge, and skill – of the agent in a 45 minute insurance review. But, if a broker
represents both more markets and more lines of financial services business, the challenge
will be to represent those knowledgeably to the consumer. Through better
education, just-in-time learning, accessible reference information and team collaboration
with remote experts – all of which will be significantly enhanced by the Internet
technologies now emerging – the broker will be well positioned to leverage his local
position, choice, service and good advice.
At the end of the day, where on the niche vs generalist spectrum do you expect to be?