- Where Insurance & Technology Meet

Can Brokers Manage the Next Wave of IT?

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 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. 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


Jeff Roy

What are the one or two big problems if solved would solve a number of other problems in our industry? Answer – Company portals and claims process management.
The big issue now evolve around the broker management systems (BMS) systems and companies not providing real-time solutions so brokers can provide quick changes and critical information to their consumer. Also a number of brokers have been slow to adopt the new tools the companies and BMS finally develop to have ass solve these problems and this only perpetuate this problem.
Historically brokers have to push and beg to get changes done in a timely manner with companies and BMS systems. Politics delays the best solutions and time and money is wasted.
Now Many of the progressive brokers have to use 2-8 different vendors to accomplish the task they need to do in order to provide customer service solutions. Brokers have to employee people to do portal entry work instead of marketing and social media work. Insurance companies also have been way to slow to integrate in with the BMS (Broker management system).

The problem is this simple – If brokers can not do real-time upload of new business and policy change and tracking their claim, how can they map this out to clients to do self serve ? This problem needs to be solved and is the greatest single issue facing our industry now and moving forward. Clients want quick changes and want to be informed through the service process. If the industry spent money improving customer experience and service this pays a better return on investment than spending more money on marketing according to many studies. Good service experience on new business,changes, claims, with the correct touches points added before,during and after sales and service will allow brokers to improve retention, cross sell, upsell and get referrals. These are key result areas.

If BMS systems and insurance companies would quit treating investment in better brokers solutions as an expense and instead as an investment in providing better customer service that would improve retention, the industry would be in a way better position. Brokers would have
1.Extra money to hire a full time digital media specialist. Double entry and poor solutions affect our retention and costs us $1000.00 in extra staff that would be better deployed in marketing.
2. More referrals
3. More time to cross sell
4. More time to develop relationships and protect clients through life.
5. Extra money to market telematics.
6. Money to spend on Big data profiling projects. We need some support and help in finding our ideal clients and sample profile.
Customer service is not a department but a way of thinking that is part of your corporate culture.

The industry needs to sit down and define the real problems and solve them. Focusing on the new shiny object of the month, while ignoring the real elephant in the room that is adding 10 expense points to the broker distribution channel is not helping anyone.

Our industry needs better leadership and our brokers need to demand the right things. I am hopeful the IBAO or ORBIT can heard the cats of our industry and speak with one voice. There are too many people that do not understand the real issues. These people are holding us back by not implementing or not using their power to demand better solutions and they are dead weight trying to pull the broker distribution ship down. Solve these two critical problems and you can easily solve the new challenges. Talks cheap we need results, collaboration and action.
If you do not care who gets the credit you would be amazed at what you can accomplish. Time to check the egos at the door and get things done.
Can our industry actually solve our problems in a timely manner ? The clock is ticking and its time to get some urgency. The 11th hour is here.

Larry Penney


You speak with a passion. I like it. So, I’ll ask you this question. Would you invest your money and resources into building a better BMS?

Brokers are usually the people who are the champions for change. Typically, if a broker likes a technology product, they call up a company and say “Hey Company! I bring you guys lots of business, you should look at using this for all of your brokers.” You want to offload the risks to someone with deeper pockets, that’s understandable. However, companies get lots these requests. Which one to choose? I sat at a company table. Here’s their response: “We’ve lost a lot of money chasing ideas.” So who at the company is going to stick their head out on the block chasing your idea?

If you’re going to the company for investment, then I believe they require absolute proof that the technology is going to deliver value for them. Vendors, associations and interest groups haven’t been able to prove their ideas. If they have, then it’s not significant. Promises look great on paper.

I know of brokers who have grabbed the elephant by the tusks and made their own BMS, rating and accounting systems. It was a big investment, but today they are enjoying the benefits.


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