A recent survey found that insurance practitioners are committing significant resources for technology to support customer service and growth. Digging a bit deeper, we see another trend: better alignment between insurers and brokers/agents.
We’d be interested in your thoughts.
Insurance-Canada.ca recently partnered with Xchanging, an international business procurement and technology service provider, to conduct a survey gauging the status and direction of insurance and technology in Canada. We recently published a summary of the results.
Sean Allen, vice president of sales, Xchanging Insurance Services, North America summarized the results: “It’s encouraging to see the market making a concerted and dedicated effort toward investing in modernizing its technological infrastructure to better serve its growing customer base, capitalize on growth opportunities and ward off rising competition.”
Our purpose here is to dig a little deeper to compare the responses from two groups – insurers and brokers/agents – to compare their respective thoughts. Interestingly, there appears to be more alignment than we expected, especially around a very contentious area.
The business objectives …
The survey asked about goals for 2015. Both groups gave the same top three list:
- Increase market share
- Enhance operational flexibility and optimize business processing
- Reach customers in new ways and through multiple platforms
And, for the most part, the brokers/agents agree with the insurers on opportunity areas to achieve these goals:
- New product and service development
- New methods and systems for customer engagement
- Strategic talent acquisition
However, insurers put priority on one additional element: development of modern core applications. This is a consistent theme which, we believe, will continue to preoccupy insurers.
The challenges …
Both insurers and brokers/agents see the top challenges for 2015 including:
- Developing new products
- Acquiring required talent
However, carriers see one more: modernization of core technologies (again).
The survey asked about competition. It’s interesting to note that brokers/agents see non-conventional distributors (77% of responses) as the top competitors. The carriers see the biggest competition as local insurers (58%).
Could these local insurers be those who have gone through the core systems modernization?
Budgets are supporting actions to address challenges in both the broker/agent and carrier offices. On the broker/agent side, 58% of the respondents anticipated an increase in IT budget in 2015; with 25% of brokers/agents seeing the increase being better than 5%. None of the brokers saw a decrease.
On the carrier side, 7% of respondents did see a decrease on the horizon. However, 44% saw increases greater than 5%, and an additional 25% saw increases in the 1%-5% range.
We think that on the carrier side at least, these increases reflect the need to modernize core systems.
(We have published a number of voices in this space on the topic of core systems modernization (see, e.g., Seriously, What is ‘Technology Modernization’ – and Why Should Business Managers Care?). The rate of announcements of new sales by systems administration vendors suggest that modernization projects will be going on for some time to come.)
Carriers and brokers/agents agree that broker connectivity is a priority. However, carriers seem to have made progress in implementing a specific solution that has been resisted by brokers: installing portals in brokers’ office.
Significantly, brokers seem to be accepting this as a reality.
The survey asked about current status of, and short term plans, for deployment. Twenty eight percent of carriers responded that these portals were either widely deployed or fully integrated in operations already. An additional 30% said the portals were deployed in certain areas. Only 19% said that portal did not apply in 2014.
The brokers reflected this reality. Fully 67% of broker respondents indicated that there were pilot or full deployments in their offices.
We recognize that brokers have committed time, energy, and money to promote standards based data exchange. The perceived polar opposite of this is implementation of insurer specific proprietary portals. So why are brokers/agents allowing these to be deployed?
The reality is, well, reality. As this survey underscores, insurers are deep into systems modernization projects which are consuming all available resources. The purpose of these projects is to remain competitive and improve service to the end customer. This ultimately benefits the brokers.
At the insurer end, there are lots of projects that are not being funded pending completion of the modernization initiatives. One of these is increased standards-based broker interface. Many of these insurers already have partial solutions based on standards which remain operational.
We think the broker respondents to this survey are coming to the realization that other priorities need to be addressed first.
What do you think?
How do these results track with your thoughts? Are the priorities aligned with yours? Is the budget range outside your range? And about Connectivity, …..
Let us know.