An Insurer's View - Join the queue

Much has been written about the need to use technology more efficiently within the commercial insurance industry and the industry's intransigence in adopting technology at the same pace as its peers in other financial services.

However, the message is now getting through. There is a genuine interest among brokers and insurers to explore how the internet and technology in general can improve the efficiency and quality of transactions between each other and with their customers.

NIG believes technology has a significant role to play in the commercial insurance market and is proactively investing in technology to enhance the quality of service it delivers to brokers.

The key objective behind its investments is to make the transaction process with brokers efficient, hence low-cost and simple. The focus is on 'auto-rating' package products and 'automating' complex products.

For simple package business, usually of less than £2000 in premium, brokers want quick, online quotes. Online, instantaneous delivery of documents, including statement of fact and key policy documents, also ensures they can place their client on cover quickly. For complex products, where manual underwriting is required, the focus is on automating the risk capture and quote-delivery processes as far as possible. So package and complex products need different technologies.

Before joining imarket NIG had developed its extranet, NIG Network, which proved a big success with its brokers. It is primarily package-focused and seeks to deliver the benefits outlined above - simple and quick quotes, online instantaneous documents and access to all its commercial package products. It cuts the time of buying a policy significantly, thus freeing up brokers' time to concentrate on other areas of their business.

NIG Network now delivers a significant proportion of its package policies and its use has grown sharply since the regulatory changes under the Financial Services Authority. Regulation has increased the emphasis that brokers place on efficiency and transaction costs. As average premiums for package business are low, that business volume has moved online rapidly.

Building on the extranet

Why did NIG invest in imarket? Partly to build on the success of NIG Network, which had convinced it that commercial insurance online trading would grow rapidly in the next few years. Also, it sensed that brokers were dissatisfied with keying in the same data several times and with the industry's historical reliance upon reams of paperwork. Myriad parties - brokers, intermediaries and insurers - had their own systems and these could not 'talk' to each other. So it was hard to reduce paperwork and increase efficiency - ultimately reducing cost.

As a commercial insurance industry initiative, imarket is addressing exactly that challenge. To paraphrase Polaris, imarket is an e-commerce portal enabling quick, simple and cost-efficient business processing between insurers and intermediaries and is recognised as the industry standard. It has provided industry-standard risk-capture questions for a large range of commercial products and these are being supported by participating insurers as well as broker software houses.

This means brokers have a growing capability to access multiple insurer quotes from the imarket portal or from their software houses, where the latter has completed integration for that product with imarket.

The imarket story so far indicates that the first hurdle of creating broker awareness appears to have been crossed; brokers know about it and it is widely discussed in the market and in the media. More than 2450 broking firms are now signed up to imarket and about 50 new brokers are joining every month.

The number of transactions is rising and in June this year the reported number of transactions made via imarket had more than tripled in the previous 10 months. In April, 25 000 individual transactions were made compared with just 8500 in July 2005. So as more insurers and software houses are going live with new products on the portal, broker registrations, use and interest are all growing.

There are also challenges. Getting the variety of systems to talk is not easy and an initiative such as imarket, by its nature, will always require a long-term horizon and sustained investments. An industry initiative requires multiple organisations to agree common trading standards and resolve issues among themselves. When NIG joined imarket it expected these challenges but was optimistic that they were surmountable.

Automated process, local support

In September this year NIG became the first insurer to offer a motor trade product on imarket; all NIG brokers that are registered on imarket will have access to this simple and efficient way of obtaining motor trade quotes. For complex products, its focus is on automating and not on auto-rating.

Hence, while the risk-capture process for motor trade was automated via imarket, brokers continue to benefit from local underwriting support provided by motor-trade underwriters within NIG's regional branch network.

As part of automating the process a key benefit for brokers is that imarket-initiated motor trade cover can be provided on the basis of a statement of fact, which eliminates the need for proposal forms, making the process simpler.

The fact that the first product offered on imarket was motor trade, where NIG's underwriting strengths are well known in the market place, demonstrated its belief that imarket was an important and strategic investment for it.

In addition to motor trade, brokers can click through from imarket to NIG's extranet, NIG Network, using their existing imarket user ID and password, should they chose to. This single sign-on removes the need to remember multiple passwords.

Although it is still early days, the initial feedback from brokers has been very positive. The NIG broker help-desk is receiving a steadily growing number of registration requests from brokers who have requested access to its services on the imarket website. In the first fortnight since joining, the number of click-throughs to NIG Network is also impressive.

So, what is its approach towards e-trading investments in the future? It has a generic confidence in the pivotal role that technology will play in the commercial insurance industry so it wants to enhance the benefits already available to brokers by offering them good choice and flexibility in accessing its products and services via whatever technology route they prefer NIG Network, imarket or their own back-office systems.

Challenge of technology

Historically, the adoption of technology has always posed sizeable challenges to organisations, especially smaller businesses. Concern is inevitable about data migration, systems upgrades, training and support and so forth. This is why NIG's products and services are available via a range of technology channels for its brokers so they can access them from whichever route they find the simplest and most efficient. NIG joined imarket not to resolve existing e-commerce and online issues but to add to the network already available to its brokers.

imarket's standing as the industry standard online trading initiative meant that NIG, as a significant small to medium-sized enterprises insurer, would benefit significantly from joining. The decision to join imarket was also in line with NIG's commitment to offer brokers choice and flexibility.

Broker impace

NIG believes the technology has had a significant impact on brokers' business. Initiatives such as imarket and insurer's own extranets are playing a key role in making the insurer-broker process simpler and more efficient.

However, what of the brokers' own customers, the policyholders? NIG believes there are some exciting opportunities for brokers to establish online commercial insurance brands in the market. In the last two years broadband internet connections at home have truly became a mainstream consumer product. Falling prices, faster connectivity, the growing perception that the internet is the place to look for 'deals' and the emergence of price comparison sites means that increasingly, customers will seek products and services online first.

First stop online

In markets such as car and home insurance the high use of internet by customers is no longer a surprise. In the commercial insurance market, the use is still low but as customers increasingly rely on the internet for access to products and services in other markets, they will naturally start expecting commercial insurance to be easily available online as well. This is an opportunity that brokers can and must actively seek to explore.

When compared with the ease with which consumers today obtain travel documents, bank statements and mortgage applications online, it does seem astonishing that commercial insurance processes are still not available online to customers in a seamless manner.

The brokers who can break this mould and provide simple online options to their customers could be looking at some really exciting opportunities in the next few years.

NIG is convinced that technology has an increasing role to play in the commercial insurance industry. Its conviction has been justified by the rapid growth in the number of policies sold from its extranet, NIG Network.

At the same time it wants to offer technology choices and flexibility to its brokers and has been impressed by the growing visibility, use and range of products and services offered by imarket, which is the only commercial industry standard initiative and is supported by brokers, insurers and software houses.

In addition to motor trade, over the coming months, it will continue to add to the range of its imarket products and services.

Eventually, however, the decision is for the brokers to make - do the available technology channels make their business processes simpler and more efficient? If the answer is yes, then they should go ahead and actively embrace the technology channels that work best for their business.