Commercial Insurance Broking in a Disruptive Age of Emerging Technology
Living in an age of emerging technology, we have seen changes to many industries. There are some job roles that are no longer viable due to competition from enhanced software and advanced technology. With this disruption in mind, many sectors are concerned about the roles that they will have to play in the coming decades and the ways in which they must adapt to be able to compete with the provisions of emerging technology.
The issue is so pertinent to the insurance broking sector that the Chartered Insurance Institute has recently produced a guide specifically to broach this topic; assessing the future of commercial insurance broking and the way that the industry must adapt if it wants to continue to remain relevant in a technological age.
The implementation of new technology within the insurance sector is already here - and advancing. Insurance technology is seeing rapid interest from investment companies, with 2.67 billion dollars invested globally in 2015 – a massive ten times the investment experienced two years previously, in 2013.[i] To survive, insurance brokers will need to utilise this technology in the service that they offer, or risk losing business to competitors who have achieved a more seamless, higher quality and less expensive experience for the consumer through use of technology.
Accenture advise that while strategizing their role in this new technological environment, brokers must identify which technological advancements may fit best for their own business. It optimistically suggests that while current income opportunity may be disrupted, the emerging technology allows insurance brokers massive opportunity for business expansion in other areas.[ii]
This technology can cover a wide range of services and opportunities, including initial purchase, data collection, reaching out to clients, risk assessments, administrating and the potential for a remote workforce. The Internet of Things (data sharing via information from a variety of everyday devices) is going to be important to the future of Commercial Insurance Broking. A 2015 survey by Accenture shows that 44% of respondents assumed I of T was likely to have a massive impact on the growth of their companies.[iii] Now in 2017 this figure may be even higher.
Technology can also be used to reduce administration time and collect and interpret data, giving more time for personal interactions with clients. Currently statistics indicate that Account Handlers spend 63% of their time on administration and only 37% of their time on serving clients.[iv] Increasing the time used to interact with clients can help to cement loyalties as well as being a more efficient way of establishing client needs and requirements.
Technology is also vital for attracting and retaining clients – currently social media is a particularly important mode of communication, with 90% of marketers suggesting that an investment in social media boosts their business exposure.[v]
Investing in technology is likely to include creating partnerships with tech companies. There will need to be a lot of strategy involved, but a recent survey showed that 94% of insurance executives believe that moving towards a “platform-based business model,” and creating “ecosystems with digital partners” is vital to their business.”[vi] Missing out on these partnerships at this stage could be a critical error in the push to stay relevant in an age of emerging technology.
Despite the increase of self-serve insurances purchased due to advancing technology, figures suggest that premiums bought through websites are of 40% less value than those bought through insurance brokers.[vii] This indicates that many Small and Medium Enterprises (SMEs) still prefer to purchase complex or higher value insurance policies though contact with industry experts. Brokers must capitalise on this current demand, to ensure that the personal advice remains invaluable into the future. Brokers can no longer simply be a mediator between a client and an underwriter - they must specialise, particularly in advice and risk management. While technology can be utilised to help in gathering data for a more efficient risk management analysis, brokers can position themselves so that they (or a department of their company) specialise in risk advice. A recent poll, via one-to-one interviews with SMEs, suggested that currently around three times as many companies appreciate their insurance brokers for the satisfaction of knowing they are getting a good value product, than for getting risk management advice for their business.[viii] This is a concern, particularly as the availability of budget products online increases. Insurance brokers need to increase the level of advice that they give, making their input invaluable to clients.
Artificial Intelligence is likely to be a big player in the future of Insurance Broking, with machines developing in their ability to make decisions and offer advice. A 2016 poll suggests that 70% of respondents anticipate that they will use AI for underwriting in the next five years.[ix] However, there is likely to always be a core of people who will prefer human interaction – a personable human being can offer something that an AI cannot, in terms of responding to human emotions with empathy, quickly assessing concerns and responding to them appropriately and offering reassurances where necessary.
Recruit the Best
With an increasing need for technological skill and risk management expertise, recruiting the best candidates for your company will be vital. Specialist Insurance recruitment agencies will be able to talk through Insurance Brokers’ requirements and find a selection of the best candidates for the company.
Invest in Start-Up Businesses
Evidence suggests that as businesses become larger and more complex, their reliance on experienced and specialised insurance brokers grows. Investing time developing relationships with SMEs when they are small and relatively simple can be a strategic business move. See our blog on establishing brand loyalty for suggestions on how to increase loyalty from clients.
Ensure the Future
The future of commercial insurance broking will see a huge investment of money and time in technology. Embracing technological advancements will be critical, as well as engaging with specialist recruiters as opportunities maximise for skills in technology, risk management and customer interaction.
[i] The Chartered Insurance Institute, 2017. The Future of Commercial Insurance Broking – CII Research Report, 16-17.
[ii] Accenture, 2016. Eight Big Technology Trends that Insurance Brokers Should Understand before Finalising their Business Strategies. [Online]. Available at: http://insuranceblog.accenture.com/eight-big-technology-trends-that-insurance-brokers-should-understand-before-finalizing-their-business-strategies. [Accessed 29 May 2017].
[iii] Accenture, 2015. Reimagining Insurance Distribution., Accenture Distribution and Agency Management Survey 2015.
[vi] Accenture, 2017. Insurance Technology Vision 2017. Technology For People - The Era of the Intelligent Insurer.
[vii] The Chartered Insurance Institute, 2017. The Future of Commercial Insurance Broking – CII Research Report, 20.
[viii] The Chartered Insurance Institute, 2017. The Future of Commercial Insurance Broking – CII Research Report, 28.
[ix] The Chartered Insurance Institute, 2017. The Future of Commercial Insurance Broking – CII Research Report, 50.