Alaric Nightingale looks at the rise and rise of new technology and concludes that no one working in the insurance industry can afford not to be computer literate.
Insurance brokers are now in a tricky position. The internet train is gathering momentum all the time. Infomediaries rather than intermediaries are being touted as the future within many business sectors including insurance.
It is estimated that 12 million people have access to the web and he Independent Television Commission has estimated that there are now 1,250,000 digital television subscribers in the UK and everyone will eventually be "forced" to take this new medium by around 2015.
Advantages of new technologies include a big reduction in business costs - Policy Master estimates 60%. Customers will be able to look at insurance products at their leisure without being pressured into buying.
Another bonus could be for customers to carry out their own administrative tasks via an internet-linked intranet. The customer could log on, visit their insurance provider's site and change their personal details. Hundreds of work-hours wiped out at a stroke representing vast savings for insurance providers.
Cost and advice
But it is not straightforward for brokers wishing to embrace this technology. First there is the cost involved, then there is the question of where to go to find the right advice.
The obvious place to look for technology is the software houses: Misys, Policy Master, NMT, CSC, Cheshire and so on. These are the companies with the know how to harness the internet with the strengths of brokers.
Policy Master will soon have PM On-Line up and running, an internet strategy for brokers. Misys is developing Screentrade at Shaws, a brokerage it owns. The stated idea behind Screentrade is to sell the technology behind it to brokers once everything has been perfected. But Misys is running the operation through Misys Interactive, a separate company to Misys Financial Systems which runs the broker systems.
Is Screentrade a threat to brokers?
Until now, brokers have barely grumbled about Screentrade. This is because it is not doing anything to threaten their business at the present time.
As one Misys-using broker put it: "So far, no brokers are worried about Screentrade because it is not really doing anything. And when, and if, it does get off the ground, it is more likely to appeal to the type of person who buys products from direct insurers - both because of the nature of the products that work with the internet, and the customer-type that uses the internet."
There is, though, an argument which says the internet, for all the hype surrounding it, is about a conceptual and cultural change that is taking place. With insurance being sold on television, the convenience factor could begin to weigh heavily against brokers.
NMT is developing its Premier Plus package to offer internet functionality to address many of the issues already raised. Policy Master says that MTAs, quotes, adding drivers and claims will all be available to brokers under its PM On-Line technology.
And Policy Master has linked up with CGU and a panel of hitherto un-named insurers to provide a digital television application.
This move raises obvious questions: what financial and technological resources has this taken from Policy Master? and what role is Policy Master playing - is it simply providing the software, or will it become a virtual brokerage in its own right?
The counter argument to this is that Policy Master says it has received no criticism from brokers for its development of the digital television operation.
Not all the software houses are charging at the internet as boldly as Misys and Policy Master. CSC has set up www.keychoice.com, a site for the general public. Brokers can sit behind the Key Choice brand and quote for the business that the site generates.
Another possibility is that a plethora of new players will arrive on the market. Smaller technology companies coming at the medium fresh, with different attitudes on how insurance can be sold over the internet.
Quote and Buy, a virtual broker, is said to have developed something exciting - a fully transactional broker site with hundreds of products available. The idea behind the Net Trading Platform was very effective and conceived with brokers in mind. A central web site from which brokers can download insurer information.
Brokers turned software producers
Alternatively, brokers themselves could be the ones who provide internet solutions for the broking fraternity. Steve Verrall, now chief executive at Policy Master, was originally a broker but he had such a clear grasp of technology that he created a software house that has subsequently become one of the major players.
It could be that someone will enjoy such success as an internet consultant, that they leave behind broking work and focus instead on advising other brokers how to develop their internet systems. Just a crazy thought.