Brokers are ready to embrace the electronic workplace, but they need guidance. John Hancock explains
No business can operate without technology-based processes, yet users are still divided over their importance. As Paul Harrison, affinity director at Smart & Cook, puts it: “Some still think the web is a dark art, but a growing number see it as an equaliser, empowering small firms.”
So is the electronic world a threat to brokers or an opportunity – and how can companies join the internet revolution?
Most regard it as an opportunity, a tool to improve the quality of their service. All acknowledge that products that can be easily commoditised, such as motor and some home lines, will be vulnerable to wholly-electronic, direct sales processes.
But most feel confident that a number of personal lines clients and most commercial clients will continue to value the advice and support of brokers.
There is a feeling that commercial lines, where brokers still dominate, are less vulnerable, because they require brokers to give advice and transact policies.
It is the commoditised and price-driven personal lines products that are becoming available on the web.
But some direct and web-based underwriters are trying to produce commoditised low-end commercial solutions. Shona Robertson, a partner at Aberdeen broker H&R Insurance Services, believes the web presents a good opportunity for all brokers.
“The tools are available, it’s a matter of investing and deciding on the level of functionality,” she says.
H&R has created a paperless work environment with some of its workforce operating from home.
Not only does the practice retain skills, for instance, when staff become parents, but it also promotes efficiency – clients emailing the firm at odd hours are often answered directly.
Alongside the web-based commoditised products, brokers also have Imarket, an e-commerce portal, bringing intermediaries and insurers together on a single platform.
There are concerns that Imarket doesn’t seem to have achieved the full support of all insurers and that some brokers do not really understand it.
There certainly seems to be a need for education and a thorough explanation of what differentiates its service from others.
It also lacks single keying and cannot integrate easily with all broker systems. This creates doubts as to whether it will ever reach the critical mass necessary for universal use.
But taking the bigger picture, it does seem that brokers are thriving in the electronic workplace. The challenge now is to make even better use of it.
Shaune Worrall, head of trading at Tower-gate AUL and deputy chairman of Biba’s property committee, identified two key stages in the selection of IT capabilities. “First know what you do, then find out what you need [to do it].” ‘
Five steps to joining the technology revolution
1. Get the back office up to speed
The spine of a broker business is the back office. Most brokers use IT and electronic processes in their back office, but it is essential those functions should be integrated with the web processes, to enjoy the full benefits of both.
An electronic back office can create the basis of a paperless operation, and for some processes, introduce single keying, which saves time, increases accuracy and ensures that all information is captured.
Costs vary for different systems and their installation and operation.
A very important area for brokers who wish to leverage the value of client relationships is customer relationship management (CRM).
However, CRM makes heavy demands of management information systems and staff will need training to make it work.
2. Set up an IT support system
Solid IT support is crucial for any broker business. Most brokers operate two levels of IT support. Internally, it is useful to have someone who has IT experience, is keen to learn and is confident communicating with providers â€“ as well as defining and specifying the practiceâ€™s needs to system providers. For higher level issues, it is probably better to have an outsourced relationship with a specialist IT support service.
Any electronic and IT solutions will benefit from a management team and/or owners who are not afraid of technology.
3. Consider outsourcing
There is a trend towards outsourcing all IT operations, or at least using application service provider solutions (ASP). This allows brokers to use external applications â€˜on demandâ€™ over a network, such as the web. The advantage is that the ASP provider has to buy and maintain the software.
Those who market outsourcing services point out the advantages, such as not having to maintain an IT infrastructure, secure backup and disaster recovery, automatic upgrades, optimum performance and predictable costs; in short, peace of mind.
As Neil Atkins, group marketing director at software house SSP, puts it: â€œWhile IT issues are handled by the outsource provider, the broker can concentrate on developing business.â€
5. Hunt out a bargain
These days most brokers can afford to improve the quality and effectiveness of their electronic processes.
Servers that just five or six years ago were costing Â£50,000 now go for Â£15,000 with greater capacity and functionality.
Using insurersâ€™ extranets costs nothing and they include some useful tools. Taking out a broadcast email contract can also make marketing and service communications much more cost effective â€“ a typical contract will broadcast emails to up to 8,000 clients and prospects in a month for under Â£200.
But brokers must be prepared to invest in technology for both quality and speed.
One traditional problem that now seems to be disappearing is that of legacy systems. Most current systems operate on almost any hardware, subject only to capacity and speed rather than compatibility.
5. Take the plunge
Andy Jenkins, operations director at Russell Scanlan, says: â€œEverybody sees the advantages of trading on the web, thereâ€™s a lot of talk about web enabling, but in reality very few have grasped the nettle and done it well.â€