There are huge amounts of data out there and it is now much easier for brokers to use and place business online – if only they were more aware of this
With approximately 5.2 million SMEs in the UK, this area of commercial insurance is undoubtedly complex – ranging from sole traders to medium-sized enterprises employing up to 250 employees and trading in a multitude of professions and trades. With limited revenue and a low perceived need for cover, the segment presents its own unique insurance challenges.
However, the negative perception around available cover, affordable pricing and ease of purchase for SMEs doesn’t just lie with the end customer. With significant amounts of data available to insurers and intelligent rating systems expanding the size and types of business risk that electronic trading can be used for, it is now becoming easier for brokers to use and place business online – if only they were aware of it.
Therefore, insurers have a key role to play in increasing awareness, myth busting and putting brokers in the driving seat.
The most common misconception is around the size of business and associated risk premium that can be handled online. Etrading can handle larger risks up to £7.5m turnover, ranging from plumbing to printing to plastics, highlighting that it is no longer only the simple risks, such as shops and offices that are suited to online platforms.
Within the industry, there is a general appreciation of the cost and time benefits electronic trading can bring but an underlying apprehension that embracing full cycle systems will render the position and work of the broking profession obsolete.
Another unwarranted misconception in this area is the concern that intelligent electronic trading systems may unfairly and misleadingly ‘expose’ brokers as being simplistic ‘quote and offer’ machines. These are both fallacies that need dispelling given the holistic offering brokers provide which is only furthered by intelligent underwriting systems. Therefore, providing customer journeys that serve brokers is crucial.
Being a customer-centric organisation means providing solutions that best serve, not only the end customer, but importantly, the broker channel. The need for brokers to provide their customers with a quick and effective service has never been greater.
Digital platforms can, with the right set up, not only assist brokers but enable them and the customer. Multichannel, user-friendly self-service has become a staple for trading smaller risks, but that threshold is constantly being pushed. Intelligent systems are the answer here, as simple measures such as extending question sets on form-based quoting systems lead to a poor customer journey, with increased timescale to obtain a quote and extended documentation. This is not just at the detriment of the broker but would also concern the Financial Conduct Authority.
Lack of statistical relevance can be supplemented with external data sources to ensure the right result but industrial application of analytics tools needs careful management and outcomes must be considered in the context of the entire business model. If providers fail to integrate the strategic direction even the best tools available will fail the customer in the longer term.
Using existing databases and applying rating technology enhances business intelligence and brings these significant advantages to the SME insurance market. There are very real benefits that can be secured through the deployment of data and rating technology – and tools traditionally used in the personal lines markets can be focused on commercial portfolios.
The personal lines market faces a very different landscape. It is well documented and known within the profession that aggregators have allowed the personal lines market to be well-served electronically. With large data sets driving trends and correlations that accurately inform decision making, the customer is given rapid access to results and available choices for their risk. The result of this is that customers are confident in their online pursuits of simple and comparable personal lines insurance.
However this confidence doesn’t translate to the commercial lines market, especially when customers are looking to purchase complex products online. From the insurer perspective, the evolving distribution landscape adds further complexity to the business insurance market, which combined with the challenges around statistical relevance of data, makes auto-rating a challenge. These commercial challenges do not support an excellent customer experience.
But the customer experience, for both broker and end customer is paramount and most importantly, more than just a game of data. A solution must target customer needs effectively, deliver the right product and, ultimately, serve complex products to customers in a simple way by using tools that bespoke and enhance the experience.
Solutions to the challenges
The solution for these challenges starts with accurate datasets, internally and externally. A wealth of data is available and developing links to unstructured data in areas such as web chat, social media and diallers can and has enhanced algorithm stability and accuracy. This technology gives the ability to accurately price an unrivalled spread of industries, delivering prices to brokers in most instances.
Intelligent systems have the power to put the broker in the driving seat and insurers need to do more to raise awareness of the support electronic trading provides to their service and offering. It is a not replacement of either the broker or underwriter. The professionalism agenda within the industry has and will build upon the entire service broker’s offer. Having a better understanding of the wider and larger range of risks than can be traded online and the additional benefits this approach brings will only improve the customer experience.
Not only does it make it much easier for brokers to use and place businesses online, it also provides additional benefits for intermediaries, customer and insurer.
Time is saved in risk presentation, which can now be supplemented through external dataset feeds. This in turn improves the broker’s trust in electronic solutions as data capture fields are increasingly populated by the insurer.
Critically, reducing this data capture timeframe does not mean a reduction in understanding of the customer but actually increases customer knowledge to a detailed level never experienced before.
As a result, insurers are understanding customers in a new way – outside of simple physical risk capture – which is allowing enhanced development of products for the market while providing better solutions for brokers. This will only cement as further use and development of datasets will continue to grow the digital foot print, widening the complexity of products capable of being e-traded and reducing referrals to underwriters.
These benefits mean simple touch points can be removed, allowing specialist cases to go to the underwriter and get the attention they deserve.
Supporting electronic trading platforms with a team of highly qualified underwriters with decision-making authority gives the support, service, dedication and expertise to ensure brokers deliver a quality service to clients.
Underwriting systems have become much more intelligent with the use of external databases and carriers own data warehouses. Analysts can make links between questions sets that make the systems capable of writing more sophisticated risks than just packages.
To be successful, the carrier must have an integrated business model that includes the ability to discuss these more complex cases with underwriters if they wish to, helping to complete the electronic journey in the most efficient way possible that brokers understand and fully support.
In an age of rapid change, new business models will continue to challenge current thinking. This will be an evolving process with the importance of enhancing the customer experience with pragmatic solutions vital to future success. Broker understanding is fundamental to this.
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