Transforming the way insurance is delivered through brokers should be on the mind of every insurance CEO. The Insurance Information Institute published a study on Insurance distribution trends showing that independent brokers and agents remain the dominant distribution channel and their market share is growing.
Yet, somehow, the broker channel has been overlooked for transformation. Technological advancement for brokers is centered around “me too” customer portals for quoting and even selling insurance.
Transformation Should be Measured in EBITDA
Insurance transformation is subjective – “Transformation is where customers can now quote and purchase their insurance instantly.” A better way of measuring transformation came from a McKinsey podcast that suggested that transformation should be defined by the results it brings. “If you’re not targeting at least 15 or 20 percent [of EBITDA], in our mind it’s hard to call that a transformation” – Digital transformation on the CEO agenda, Rodney Zemmel, McKinsey & Company.
There are too many “transformations” that aren’t producing the results that could actually define them as transformational. Different is not transformational.
Independent insurance brokers have the advantages of choice, independent advice, advocacy and one-stop shopping. Often overlooked but just as important, independent brokers and agents are licensed and insured. Where independent brokers suffer is slower service (than alternatives) and an expensive delivery model.
Insurance Transformation Has Become Synonymous with Broker Disintermediation
Transformation in insurance has become synonymous with new delivery models that eliminate brokers from the insurance buying experience. New online intermediaries, D2C or quote portals don’t use brokers. Typical embedded solutions don’t use brokers. Insurers are building out white label solutions for brokers to pin on their websites that virtually eliminate brokers from the buying process. Even brokers themselves are developing their own online portals that don’t rely on broker interaction.
Yet, customers continue to choose to use independent brokers and agents as their preferred insurance purchase experience.
Manual Processes are the Achilles Heel of Broker Distribution
The Achilles heel of the broker distribution model is manual processes. For a broker preparing submissions, coordinating quotes, comparing coverages between many insurers is a mountain of manual tasks. Not to mention the actual job of analyzing exposures to ensure adequate loss controls, risk management practices and appropriate insurance coverages are in place for the client.
For insurers, they must underwrite and quote on multitudes of risks to “win” even one. A lot of wasted time and effort. Automated underwriting continues to change the landscape but manual processes still dominate underwriting, particularly in commercial insurance.
The majority of those manual processes can be automated or already have been automated. AI embedded in the process eliminate tedious data entry and errors as well as providing recommendations for coverages, risk mitigation and insurers. Not only can policies be completely assembled but risk management and loss control information can be included on a risk-by-risk bespoke basis.
Brokers can double their EBITDA and insurers can lower their underwriting costs by 50% or more. That is why every insurance CEO should be thinking about transforming the way insurance is delivered through brokers.
Transforming How Insurance is Delivered through Brokers
Meet client/prospect where they want to be met, by phone, email, text or at their home, farm, business or on a train, at the soccer field or in a hockey rink at 6am while you are watching your kid’s hockey practice. Enter client/prospect’s information aided by AI guide to reduce information entry, ensure error free applications and enable quick completion.
All client’s coverages are recommended with suggested limits for exposures and helpful tips at every decision point. Select coverage set for client and instantly receive quotes from all your available insurers. Change options and get instant quotes for alternatives. Better yet, quote summaries are prepared not only with coverage options and quote summaries from each insurer, but also if there are loss control or risk management information triggered by information submitted.
Upon client/prospect request for coverage, instantly issue complete policies with no further follow up required from any quoting insurer. If a change is subsequently required, just change the original application and instantly receive the policy change documents with the recalculated premiums (if applicable).
Every renewal can be updated with the latest information and requoted and instantly issued.
If transforming the way insurance is delivered through brokers is something you would like to learn more about, then contact us or call (905) 334-2070.