December's forum

Richard Adams: Many brokers insist that old systems and paper files are adequate to run their offices and are unconvinced of the new breed. How has IT developed in the past 5 years and does the panel consider brokers that have embraced it are better placed to perform going forward?

Andy Hawkes: I think the IT industry has recognised that the business side of insurance should be the driving force and we need to keep challenging IT providers to deliver what businesses actually require. There are now many examples of superb web-based IT solutions, and IT companies are now delivering systems that actually help businesses improve their efficiency, reduce their cost, and also improve their customer service. So we have come a long way but we still have got a long way to go.

Mark Dobson: On the claims side certainly we are now seeing more brokers interested in the claims tracking side of things, and being able to see the details and provide information back to the policyholder. I am seeing an uptake on that side of things.

Ryan Godfrey: Five years ago we were probably talking about e-trading platforms but development has been more market and broker driven to the point where brokers need to embrace the change to benefit their business.

Richard Adams: Does the panel think that in the case of very small brokers, their refusal to splash out on technology might actually be sensible as it is simply not economic?

Andy Hawkes: Ultimately it is the customer that will decide whether that is a viable strategy or not. We can't ignore the way the world is changing and I think the customer will increasingly expect their business service providers, whether they be insurance, banking or whoever, to deliver the service in a number of ways, such as face-to-face, through the web or by telephone. Brokers need to recognise that customers' expectation is moving in that direction.

Ryan Godfrey: I think time has moved on and businesses need to become smarter in the way that they actually handle transaction costs. IT is never going to supersede the personal side of the business, it is there to aid and help the broker develop their account.

Mark Dobson: There is much talk of the need for brokers to add value and I don't see that there is a conflict between the personal service that brokers see as added value and having the IT. I think being able to provide additional communication channels is all about providing added value.

Richard Adams: Has technology been demonised for brokers by some of the high profile failures in recent years? Or are some brokers making excuses and ignoring a business imperative?

Ryan Godfrey: It is human nature to be fearful of change. However, 10 years ago, no one foresaw people buying personal insurance online and en mass but it happened.

Richard Adams: And internet sales superseded the telephone last year for the first time.

Andy Hawkes: There is a step change required in some of the thinking of brokers and also by insurers and others in the industry. We must recognise the need for this change in attitude and move forward with the times.

Mark Dobson: Investment has always got to be in terms of the return, and can you justify it? Brokers also need to ask if they don't embrace this technology, will they still be around in the next few years? It is a business imperative, so while you might not be able to justify it in the first or second year, going forward, I think it is going to be a cost of entry.

Ryan Godfrey: Also, the younger you are the more comfortable you feel with technology but technology is not there to be fed, it is there to actually aid and support the business. However, from our perspective - having done some re-educating and actually explaining the benefits to the broker - as time moves on and they see the benefits of the system for themselves they become more comfortable with it. It's always the top people within the organisation who realise they have got to beat the transactional costs out, so often the challenge is cascading that understanding throughout their organisation to other staff.

Andy Hawkes: There is a demographic element to broker's reluctance. Often younger staff want to utilise the technology to get rid of the paper-based disaster zone - this cost burden that has occurred over many, many years. It is very difficult for bosses to justify why the tens or hundreds of thousands of pounds that have been spent in the last 10 to 20 years should be thrown away. It should because you can do it more cheaply and efficiently by utilising web-based technology. That would be my challenge to that sort of legacy thinking.

Richard Adams: The following question comes from Mike Clarkson from Stewardship who asks: "We operate a fairly basic system and can't see the need to spend thousands of pounds upgrading it with the latest technology. What benefits would there be for us to change this view in getting something new installed?"

Ryan Godfrey: I would agree with part of that question - what is the point of spending thousands to actually upgrade. As insurers, the way that we would look at this involves more web-based products because the cost of upgrading for online systems are kept to a minimum as you don't need to buy new hardware, just software packages. If we don't do that as insurers, then we are doing something wrong. Because we can't sell our wares and say to trade with us you have got to spend this amount of money.

Andy Hawkes: I think a lot of brokers will be cynical about the way that IT providers over the years have had their arm up their back and force them to buy the next upgrade. However, I would always come back to what do your customers want from you as a business? So that is the first starting point to all this, do your customers want to buy that way? If they don't, then stay where you are but recognise that the world is changing more rapidly than we ever experienced in the past, in terms of buying habits. Software providers are getting better at responding to business needs rather than dictating how your business should be run so pick your providers very carefully.

Richard Adams: How can technology help brokers drive out cost?

Andy Hawkes: Delivering documentation online is immediate, which means there is no chasing and no errors in the huge amount of work that goes on in terms of account reconciliation. So you don't end up going through 30% of errors, 25 phone calls to chase up the policy documentation, the 15 account queries that end up getting dealt with by different people. Brokers that run web-based products can deal with things the second they deal with the transaction, which saves time and time is money. It also allows the broker to spend that time on customer service relationship and building knowledge and expertise, which surely are the things that brokers want to be doing for their clients.

Ryan Godfrey: I would say that any system that can beat out the transactional costs of the business has got to be of interest to brokers. We talk about downloadable documentation that can save the postal costs of sending those documentations back to the insurer to say this is wrong it needs to be changed. All the time this burden is affecting the service that they are giving to their clients.

Mark Dobson: We are seeing this in other industries, if we can make the information available at the right time and to the right people, then there will be savings. From the claims side, making that information available upfront to the broker or to the insurer or to the policyholder about the progress of a claim will result in less phone calls. We all know that managing service centres and call centres 24 hours a day is expensive. So straight away making the information available saves money.

Richard Adams: Do you necessarily have to spend huge amounts of money to get the benefit of technology?

Andy Hawkes: If you have already committed to a base line technology and have built your business around that, there is always that deep breath that you take when making a decision to move into a web based world. Actually the costs are not as significant as people tend to think. There is time, there is effort, there are resources, and you probably you need to look at the processes and procedures that you operate. The investment required today relative to the business is far less than it was five or 10 years ago. The comments made earlier on about web-based systems is true, it is relatively cheap to put a front end with a decent database back end together these days. I don't think you have to spend fortunes.

Mark Dobson: Years ago you had to go and buy the expensive servers, put the links in yourselves, and the database. Now there are other models such as ASP where you just pay a fee.

Andy Hawkes: I totally agree with that. There are some really good solutions out there now and brokers should be looking seriously at the alternatives that are available.

Richard Adams: How important is it for brokers to have a shop window in cyberspace, particularly commercial brokers, and how does the client benefit?

Andy Hawkes: These days I expect my bank to be open after hours, I expect to be able to shop after hours and customer expectation is that services they buy should be available 24/7. Insurers as well as broker must respond to this in exactly the same way as other sectors have had to over the last few years.

Richard Adams: Obviously, claims is the moment of truth for the client, how can technology help with that?

Ryan Godfrey: With our Duet product we have a claims notification function so brokers can a) know that the claim has been logged and b) they are able to track the claim as it progresses. I think that that functionality needs to be there because people don't always have claims during office hours.

Andy Hawkes: You are absolutely right, claims is our product and we should be spending more time, effort and money making sure that our customers can experience our product in the best possible light and regardless of when that claim occurs.

Mark Dobson: We (Cunningham Lindsay) offer a range of services and, where we have close relationships at a more advanced level, some brokers completely outsource their claims departments to us. And there we are able to offer a whole range of services for claims tracking and management information. At renewal brokers will ask for management information about the claims history. But we are also text messaging and I think there is certainly a place for that as an additional communication method. We can also inform brokers and clients via text messaging alerts when certain milestones have been passed on the claim. The policyholder can actually reply to the text message and then all of these services can be branded for brokers who have outsourced their claims departments to us. This service also allows clients to manually submit a claim online.

Richard Adams: Any concluding remarks, please.

Mark Dobson: The opportunity is still there for brokers that have not yet embraced IT. I think it will be the price of entry for brokers, which they might not be able to justify the return on investment in the short term but I see it as inevitable.

Andy Hawkes: If you just look at the successful brokers, their technology is part of the core of their business. Not the core of their business but part of the core. This releases their people, their biggest asset, to get on and actually deliver the customer service and provide the knowledge, the expertise, to negotiate and do all the things that brokers are very good at but also drive that cost and that inefficiency out of their businesses. Successful brokers are forging ahead because they have got technology and good technology is part of it, the evidence is there for people to see.

Ryan Godfrey: Successful brokers and insurers are the ones that have used the technology to beat the transactional costs out of the business and actually provide a better service to the end customer. Technology is not there to be fitted, it is there to support and aid the business in actually moving forward.

- Hear this debate in full by accessing the archive on the website at www.brokermanagementforum.com. Membership is free. Look out for details of the next Broker Management Forum and the 2007 schedule, which will emailed early in the new year.

THE PANEL

Richard Adams, Editor, Professional Broking magazine

Mark Dobson, IT manager UK, Cunningham Lindsay

Ryan Godfrey, Deputy UK cargo manager, Alliance Global Corporate Specialty

Andy Hawkes, Managing director, THB Risk Solutions.