Insurance Times’ research pinpoints that back office tech is more of a focus for brokers than digital customer journeys – but some industry voices are sceptical as to the motivations behind this type of digitalisation…
Science fiction writer William Gibson observed in the 1980s that “the future is already here – it’s just not very evenly distributed”. This certainly rings true when it comes to insurance broking.
Insurance Times is currently finalising a digital adoption research report, in conjunction with Applied Systems, and this found that 63% of the 175 brokers surveyed have a digital strategy in place - but 37% don’t.
Major digital developments that brokers are exploring include investing more in cloud and analytics capabilities, as well as completing digital projects around data storage and IT cloud infrastructure. Blockchain also appears to be on the digital agenda for brokers in three to five years’ time.
Brokers seem to be implementing technology centred on their back office functionality rather than customer journeys, which has been the focus for many insurers.
Karlyn Carnahan, head of insurance, North America at research and advisory firm Celent, has also noticed this trend.
She said: “Brokers are keen to decrease expenses as their margins are extremely squeezed and one way [to do this] is to try and automate the work.
“Additionally, they face the challenge of an ageing workforce and automation provides an alternative to finding and training new employees. It can also ensure [that] work is done accurately.
“Different brokers are at different stages of progression, but blockchain is still relatively new and a long way from being a mainstream selection.”
Carnahan added that data transfer between brokers and insurers is a further digital development she has spotted in the market.
She explained: “A core broker management system can keep tabs on everything from customers and products to commissions - but if the data is complex, brokers will get insurers to download it all into their system. And insurers are investing in technology that allows them to integrate that data easily.
“Brokers need software to enable insurers to download information – [they] are increasingly opening up their application programming interfaces (APIs), which can provide [a] real-time connection.”
The Digital Adoption Report 2022, produced by Insurance Times and sponsored by Applied Systems, will be available in August/September 2022.
The findings are based on survey responses from 175 UK-based brokers.
Unfortunately, brokers themselves are far less willing to speak on the record and in detail about their digitalisation projects.
Of the 15 broking firms invited to participate in this feature – as well as others approached on Insurance Times’ behalf by trade body Biba - only Konsileo obliged (see pass notes).
Guy Ellis, managing director of HR consultancy Courageous Workplaces, explained that this secrecy around digitalisation in broking is being driven by failing business models rather than a desire to increase the time spent with clients.
He told Insurance Times: “Insurance broking has historically been a very relationship-orientated business, with a huge difference between the guys at the top with the client relationships and the others doing the admin.
“Senior brokers have tried to keep other team members away from actual broking, so they aren’t experienced enough to break away and form their own teams.
“But many senior brokers now want to retire and digitalisation enables them to think about succession planning as it frees up admin staff for broking roles. There is also a realisation that younger customers want to do things online rather than do boozy lunches or shooting.”
Ellis believes that brokers’ “whole business model has been falling apart in the last 10 years”.
He continued: “It’s a similar scenario to what happened to the financial sector back in the 1990s, when the traditional bowler hat men were supplanted by new technology.”
Insurers don’t refer to such a hidden agenda from brokers, however. Instead, many have research findings that mirror Insurance Times’ results.
For example, Aviva’s most recent Broker Barometer Survey, published in April 2022, found that 69% of brokers were interested in enhancing their operations with digital or automated processes.
Meanwhile, Axa has been working with its key broker partners on data enrichment from external sources, removing duplication in underwriting processes and exploring the potential for integrated systems via APIs.
Sarah Mallaby, distribution and trading director at Axa Commercial, said: “Some of these discussions are still at an early stage but, more generally, we are supporting brokers with best practice and training on automation and digital sales skills.”
Beazley reported that all the large and mid-sized brokers it is working with in both retail and wholesale are now investing heavily in digitalising the placement and servicing of business.
James Wright, head of technology at Beazley, explained: “They are looking to improve the user experience, customer service and data quality.
“[This] is benefiting us by improved submission of data quality, improved distribution opportunities via APIs, market hubs and portals, improved data standards and understanding of each other’s needs.”
Nevertheless, some industry experts feel that using online technology to provide a better customer sales experience should be the main priority for brokers, rather than back office innovations.
Ian McKenna, director of the Financial Technology Research Centre, said: “The next generation is more interested in financial advice than their older counterparts, but [are] also more interested in technology.
“If you’re not delivering services where your customers want them, you are invisible to them.”
Digitalisation case study: Konsileo
When independent commercial broker Konsileo launched its own proprietary platform in 2017, it was the result of three years’ hard work involving nine developers.
Peter Henderson, co-founder and chief technology officer at Konsileo, said: “We wanted to free up our brokers to spend more time with clients and insurers [as well as] to embed our organisational structure, which supports self-management, collaboration and transparency.
“That wouldn’t have been possible with the major software houses, so we built our own platform.”
Konsileo’s platform provides a peer-to-peer compliance system, aided by artificial intelligence (AI) and automation.
Traditionally, commercial brokers manually tick boxes when they have, for example, issued policy documentation. Konsileo’s system checks as many of these boxes as possible and links all documents and correspondence to the client’s file, flagging if something hasn’t happened as it should have. This allows any potential problems to be fixed promptly.
Quicker and clearer communication
The platform also helps with communications, with all emails and attachments scanned to locate key data. The information is then harvested and provisionally allocated to the file – with the account handler and account executive being notified.
With many insurers still sending documents to one central address per broking firm, Konsileo’s system scans that inbox too and flags messages to the correct team.
Additionally, the broker’s platform is also available via a mobile app, to streamline information gathering and save brokers time when they’re back in the office.
Brokers can take photos of a site during a client visit and record notes. They can also access a client’s activity log anywhere.