E-trading leads 2010 technology agenda

PB: What should be at the top of the technology agenda for broker managers in 2010?

Simon Ronaldson, Acturis: E-trading of commercial business has to be firmly on top of the pile. Despite many cynics suggesting that commercial business would always remain manually traded, Acturis has transacted over £100m of small and medium-sized enterprise premium income in the last year, reducing the amount of rework between broker and insurer enormously. The panel of products available to our brokers is set to grow, with small commercial combined already live and trading and motor trade combined and small fleet set to follow in 2010. Child: As brokers focus on their day-to-day business, one area that tends to be overlooked is how they can use information technology to improve the way they work and the service they provide to their clients. In 2010, I would recommend all brokers spend some time with their IT partner and their staff to review their business processes. Many brokers have been doing this already: for some it has been as simple as investing in refresher training for their staff to get the most out of their existing system; others have invested in transactional websites for schemes business and moving servicing online. Stepping back to look at the business need not take too much time and can pay big dividends.

Simon Hughes, Open GI: Brokers should ensure they are receiving maximum benefit from the technology available to them; many brokers still view technology as merely a cost to their business and fail to appreciate that it is a fundamental enabler. Technology should exist only to improve profitability: it's there to reduce cost, allowing users to do more with less or to increase revenues by providing market access. Too many brokers only look at the up-front cost of technology and fail to understand the return on investment, which can very often see the initial outlay recouped in a matter of months. At the top of the broker's agenda should be challenging their technology providers to demonstrate where an investment in technology can improve profitability.

Cross-platform decision

Ray Vincent, Transactor: The technology priority for any broker-based venture in 2010 is to quickly get into the mainstream with technology options. At Transactor, we are finding it straightforward to move into emergent technologies such as messaging, internet-based technology, third-party integrations and product development around the core application. This is because the world we operate in, based on Microsoft .Net architecture, is the first priority for all mobile phone, internet, third-party application, operating system, and programming language development for every horizontal market technology company in the world.

PB: What will be the biggest challenge to brokers in 2010?

Ronaldson: Rates continue to stay lower than most would like and commissions are under pressure as a result. The online trading of commercial business can only continue to increase in 2010, and this opens micro-SME to direct insurers and other large brands. Brokers need to grasp every opportunity to trade with their partner insurers in a more connected way to protect margins and business volumes. Those that do this can thrive, never mind survive.

Kevin Child, SSP: With the economic outlook remaining uncertain, it is likely to be another tough year for SMEs, forcing them to scrutinise all their costs, including their insurance premiums. This places more importance on brokers utilising technology as effectively as they can to trade smaller premium SME products efficiently, particularly with the direct writers starting to make inroads into this area. The SME e-trading platforms are now reaching critical mass in terms of connections and products, so we'll continue to see an increase in the volume of SME business transacted electronically. During 2010, we'll continue to work with our insurer partners to further increase the number of products available.

Hughes: Despite some signs of recovery, the unpredictability of the economy will still be the biggest challenge to brokers as they try to remain profitable and in business. Technology can play a role in reducing this unpredictability by helping brokers cut costs and increase revenues. The Open GI system has been designed to automate manual processes and to tap into new income streams such as the internet. Brokers that want to reduce the impact of economic challenges in 2010 should be talking to their system providers as they can help them improve processing efficiency and reduce costs.

Vincent: The challenges that brokers face differ according to the markets they are in and the type of competition they are facing. In volume personal lines, the biggest challenge is that the de facto 'route-to-market' for their clients is the aggregator channel. For other classes of business, brokers should see the way volume personal lines has gone and take on board that there is no class of insurance business that will not fit into an aggregator model; it is coming and in a fairly predictable order: by volume. So now it is non-standard motor and household, in the first quarter of 2010 it will be caravans, motor homes and taxis. It is only a matter of time before it is shops, offices, hotels, liability, small marine and so on. Proactive preparation of broker enterprise through technology acquisition and implementation will give savvy brokers a far quicker route into these channels.

Growth areas

PB: What is the next step in e-trading?

Ronaldson: The next steps are already with us, though some have yet to recognise them. Micro-SME business can already be traded online. SME business no longer requires brokers to re-key risk data across several insurer websites and again into its back office system. Larger SME business, such as commercial combined cases up to £15,000 premium, can already be electronically traded with competitive premiums available. One step has yet to be realised and this will happen in early 2010: web servicing of larger commercial clients, where client risk managers can access selected data including risk information, key documents, claims data and accounts information. Clients will also interact with brokers online: an exciting prospect.

Child: One area that has seen strong growth in 2009 is e-trading of schemes business; a trend set to continue. By investing in their own direct links with insurers for their largest books of business, brokers have been able to cut out time-consuming and costly paper-based processes, making efficiency gains. At the same time, an increasing number of brokers are investing in transactional websites for commercial products. Whether it is agricultural risks, SME or niche schemes, brokers have recognised that the volume of business transacted online will continue to grow and are investing in sites that go beyond the quote-and-buy process to include mid-term adjustments and renewals. Hughes: In my view, it will be e-trading SME business direct to the consumer. Brokers are already using the web to provide comparative quotes for SME business. The next step will be exposing this technology to the end-consumer. According to the latest figures, over a third of SME businesses would consider buying insurance online and these figures are expected to rise. Brokers should consider tapping into this market with a business-to-consumer trading solution. The Open Trader platform is already internet-enabled. From the beginning of 2010, we'll be providing our broker partners with a system offering a quote-and-buy service to their SME clients through their own websites. In short, we're mirroring our personal lines e-commerce proposition for the world of SME.

Vincent: We can already deal with any and all policy life cycle transactions on our standard internet offerings. We also have aggregators covered and are developing new channels with some of the key aggregators for new classes of business in the first quarter of 2010. We are looking at an explosion in handheld device e-trading, which will be fuelled by payment options from mobile phone technology.

Our retention management toolset, which will replace Transactor's current renewals processes, will function alongside all three of the company's quotation engines. It is the sector's first renewal-processing module to be designed and built after the aggregator revolution. The platform allows the integration of third-party technologies such as text messaging, mobile communications, social networks and geographic spatial mapping.