What lessons can be learnt from the first e-trading platform imarket and from the journey by direct sales
Breaking new ground
? imarket was one of the first e-trading platforms, formed in 2004 by Allianz, Aviva, AXA, Groupama, RSA and Zurich, who all own the managing firm Polaris. Ageas has since joined the insurer panel.
? Brokers use imarket to access multiple insurer systems through one portal. They can get quotes quickly by inputting data into imarket, which bounces quotes back from the insurer panel.
? The software is used for both personal and commercial lines, but has an emphasis on the latter.
? Other software houses use imarket to supply insurer quotes to brokers, including Acturis, SSP and Insurecom. Open GI is currently running a pilot.
What it meant
A catalyst for progress
? imarket laid the groundwork for e-trading commercial lines business, and is used by four of the main e-trading software houses. Before imarket, even personal lines e-trading relied on relatively unadvanced EDI (electronic data interchange)software to connect brokers and insurers.
? The Polaris/imarket project also proved that insurers could collaborate on their rating criteria and produce a standard that they all accepted. This removes one obstacle from any shift to e-trading more complex commercial risks.
What might happen next
? imarket is looking to sign up more software houses, which would grow the number of broker users and could broaden the insurer panel.
? Insurers want to trade more complex commercial risks online with brokers, expanding beyond the vSME policies traded now.
? The future could also see imarket expand onto the aggregators, though Polaris sales and account manager Philip Nunn says there is no real demand for this at present.
? imarket is also expanding its use of the ‘single sign-on’ option, which allows brokers to access multiple insurer extranets using just one user ID and password. Allianz and AXA offer this to their partner brokers.
? A danger for imarket is that brokers can access insurer systems electronically through other software houses, bypassing imarket.
? However, imarket has the advantages of a strong insurer panel, is free for brokers to install and is easy to match up to a broker’s office IT systems.
We’ve only just begun …
? As soon as direct sales dominated the personal lines space, taking business away from brokers, the industry turned to commercial lines as a new opportunity.
? Brokers currently control around 80%-85% of commercial lines distribution, with the remaining 15%-20% taken up by insurer direct and aggregator sales.
? The industry has been unable to commoditise commercial lines products much beyond the small-ticket end of the market, mainly because underwriters have failed to simplify question sets.
? Another factor is that many commercial customers are not searching for policies purely based on price. Tony Tarquini of Capita says that people buying insurance for businesses have the integrity of their firm – and their own jobs – on the line, so often prefer to buy insurance through an expert.
What it meant
Knowledge is power
? Many brokers got their fingers burnt when personal lines went direct, and have thought ahead to hold their ground in commercial.
? Cross-selling has become more important and more developed, as it helps to keep customers loyal and provides value from the broker apart from simply sourcing a policy.
? Giving good advice tailored to the client’s needs is another way brokers can add value and differentiate themselves.
? Another avenue for broker profit is to market through external websites. In December 2010, Towergate launched its Your Insurance arm on Comparethemarket, aiming to boost premium income by £100m within two years.
What might happen next
Adaptation is everything
? Brokers can combine their traditional advice and client knowledge with technology to let them compete with any advances in direct commercial sales from insurers and aggregators. Biba chief executive Eric Galbraith describes this as “a winning formula”.
? Some brokers, such as Professional Insurance Agents, have already started using webcams to provide face-to-face contact with clients.
? One reason brokers lost so much personal lines business was their inability to compete with direct sellers on price. Although commercial lines clients tend to be less price-focused, brokers able to cut their costs will be better placed and more competitive.