Value is the metric that matters in the drive to digital
The transformation to digital trading in commercial insurance has stuttered in recent years. The industry is talking the talk, but not quite making the walk. The good news is that things are improving.
Speaking at CFC’s UK Summit in 2022, Pat Brice said there had been development of digital trading in the personal lines sector, highlighting the market’s move to an aggregated model.
The ease, speed and simplicity offered by personal lines comparison sites has created an excellent user experience, enabled buyers to get multiple quotes and let them buy cover easier. But there’s been a struggle to deliver the same transformation in commercial lines.
But after some false dawns, Brice was keen to emphasise the renewed energy and investment in the development of digital trading platforms for commercial insurance, especially for speciality lines in the SME sector.
Providing his take on recent developments, Brice offered some points for brokers to consider as they implement a more digital approach to trading. Here’s a closer look at a few of these points.
Insurers have poured significant funds into developing their proprietary distribution platforms and some have created excellent user experiences, supported by high levels of functionality. So far, so good.
But Brice suggested brokers take a moment to find out if the technology supporting an insurer’s extranet is the same as that supporting its other channels. If not, then he said it was likely different channels would return different pricing for the same risk.
This makes it more difficult for brokers to ensure they’re getting the best premium for clients and undermines confidence in the provider.
It’s difficult to have a conversation about insurance technology without a firm trumpeting the success of its latest application programming interface (API). In layman’s terms, such technology is simply a means for two computers to talk to each other. But, as Brice is quick to point out, it’s what they’re talking about that’s important, and whether it adds any value to existing processes.
Does the API simply connect one ageing system to another, or does it add a layer of value? Does it enrich the data on the way through, provide extra levels of security, or apply artificial intelligence to deal with anomalies, rather than just spitting them out.
Insurer technology should make life easier and better for brokers. If a carrier’s APIs just connect one clunky system to another, it’s not quite as revolutionary as you’d hope!
It’s taken time for comparison sites to get a foothold in the commercial lines market and they’re now starting to offer an attractive proposition. But for brokers, there are a few questions to consider.
Who owns the platform? Who owns the data? Is it shared with or sold to third parties? If a broker loads their client’s details onto a commercial comparison platform, do they lose control of the relationship? What happens at renewal?
Client relationships are the lifeblood of any broking business, so knowing exactly how data will be used is essential when deciding on whether to work with an aggregator. Picking partners carefully will avoid surprises and deliver the best results for everyone.
In the past 20 years, technology has changed the personal lines market beyond all recognition. The same transformation is underway in the commercial lines sector and the pace of change is accelerating.
This will make life better for brokers, but as they develop their digital capabilities, Brice urges them to remain laser focused on one question. Does any proposed change add value?
If technology dazzles rather than delivers then it’s not doing its job. Added value, urged Brice, is the standard by which brokers should judge any proposed change to the way they work.
Watch the original talk here.