News analysis: Outage aftermath sparks broker concerns

The power outage at SSP which began in August and caused weeks of system downtime across over 300 of its customers has resulted in a heightened awareness of disaster recovery plans and due diligence among brokers.

One company affected by the system failure was Bollington Insurance Brokers, which was in the process of swapping from SSP to Transactor prior to the outage.

Robust questions

Criticising the way that technology provider SSP handled the communication to its brokers throughout the outage Chris Patterson, group managing director at Bollington, said: “It has made us question our view of the software houses and how robust their business continuity plans are. 

“We pay a premium to this third party organisation on the belief and understanding that their data security and their business continuity plan are far more robust than they would be for any independent insurance broker and this leads us to question that.”

In addition, Simon Mabb, managing director at Romero Insurance Brokers, which is not an SSP broker, stated that the situation had “put due diligence in the spotlight” for brokers. Mabb said that he believes people would also be going through their contracts to see whether they would get any recompense in the event of a failure or data loss.

The view that the situation has served as an eye-opener for brokers and that they are far more focused now on software recovery capability was echoed by Transactor managing director Ray Vincent, who noted that it was time for brokers “to realise how important that part of the job is and not to take anything for granted”.

“We’re being asked to produce supportive documentation, service level agreements and more often we’re finding now that the broker will have appointed an expert to represent their interests,” Vincent continued, adding that “this will leave a permanent mark on the way this industry operates”.

Market churn

According to Vincent, Transactor is currently receiving an increasing amount of enquiries, both from SSP brokers looking to swap platforms and from brokers who have previously developed their own technology but are now pondering whether that is the right way forward. 

However, Nick Giddings, proposition director at Open GI, stated that it was too soon to tell whether the events at SSP had led to churn in the market.

“The brokers will still have lots of questions they need answers for before they make any decisions,” he argued. 

“I would expect that this event has been traumatic enough for some brokers to consider their options and look to move, but we’re not seeing an impact right now. They are rightly just worrying about getting back on top of running their business at the moment.”

Meanwhile, the brokers Insurance Age spoke to highlighted that the complexities of swapping software providers made moving platforms a difficult decision to make, with Mabb adding that it was a “major undertaking” that should be made easier.

Complicated process

Vincent explained that the most complicated part of the process was migrating data, but added that he had never had a problem with another software house withholding data in the event of a moving client.

“Software houses should consider that data belongs to their client and not to them,” he continued. “They should lend their support to a client who is trying to move to another system.”

When asked whether brokers might become hesitant to welcome new technology as a result of the outage, experts agreed that it would have made people stop and think about it. However, they stressed that turning away from technology or moving away from paperless offices was not the way forward.

“If you are hesitant you’re probably going to be left behind,” Mabb concluded. “People just need to be more cautious and more questioning in their due diligence of any software provider because of the severity of getting it wrong.”