Brokers urged to take ‘leap of faith’ and move to full online connectivity with carriers
Less than one-quarter of UK commercial brokers are regularly trading electronically on an integrated basis via their back-office broking system with their carriers, according to technology provider SSP.
This equates to fewer than 1,000 intermediaries, despite full connectivity coming at a minimal cost to brokers, since the insurers provide the systems to support it.
SSP head of e-trading Jason Moseley revealed the surprising statistic at a recent Insurance Times and ACE Broker Clinic on connectivity.
Moseley said: “While electronic trading is widespread, with high volumes of brokers using, for example, insurers’ extranets or broker extranet platforms like iPrism, the holy grail for brokers is to e-trade on an integrated basis from their own application into the carriers.
“However, only around 50% of brokers are enabled to do this.” Of this 50%, just half are doing so regularly, SSP estimates.
Moseley warned that “the market has to change” because brokers are missing the opportunity to make huge savings: up to 70% of operational costs can be cut by keying in data once, according to SSP, rather than keying it into multiple systems, or calling and sending emails to multiple carriers, which is even more time-consuming.
The resources saved can be redirected into “improving service for clients”, which is becoming critical as clients become more informed and demanding, Moseley said.
Brokers have been reluctant to move to full connectivity, he added, because they are used to communicating constantly with insurers. However, price pressures and industry competition mean that brokers can no longer afford to ignore the technology. “It will take a leap of faith for brokers to adopt a fully automated approach,” Moseley said, “especially if they have had relationships with underwriters for years. But they need to change the way they do business.”
Despite current low take-up, Moseley predicted that more brokers would move to full connectivity during 2012.
“I can’t put a number on it, but we expect to see significant growth this year - it’s moving in the right direction,” he said.
He was speaking as AXA released details of plans to ramp up e-trading this year. AXA has launched four new e-traded products, the start of a push that will see another 10 products online by year-end.
The four new e-traded products are tradesmen’s, professional, directors’ and officers’, and landlords’ insurance. The products have
been developed for trading use online and will fall under AXA’s Simple range.
AXA managing director intermediary Matthew Reed said: “They [brokers] have told us that most e-traded products are traditional policies elbowed online, making it frustrating to get the right cover quickly, so we’ve taken a different approach.
“We’ve gone back to the drawing board and specifically designed our Simple products for e-trading.”
Elsewhere, QBE confirmed David Greaves has joined from RSA, where he was SME trading director, to head up the Australian insurer’s Fast Flow e-traded business in the UK.
He will initially focus on commercial property and casualty lines for small and micro businesses with a typical premium level of up to £20,000.
QBE European Operations chief underwriting officer of property, casualty and motor Ash Bathia said: “QBE has ambitious plans for its SME offering and e-trading capabilities over the next few years.”
Last month, LV= Broker revealed plans to work with Acturis to develop LV= Easytrade, a new e-trading tool for brokers.
Brokers will be able to access real-time quotes, share client documents and refer complex cases.
The seven LV= Broker products that will be available on the platform are property owners, shops, offices, surgeries, restaurants, public houses, hotel and guesthouses, and trades and professionals.
Talking points …
● Why are brokers being so slow in taking up trading on an integrated basis via the back office?
● Are insurers working hard enough to persuade brokers about the benefits of e-trading?
● Now that AXA has revealed its plans for e-trading in 2012, what have RSA and NIG got to offer? Both insurers are expected to reveal new e-traded product launches for brokers this year.