Technology - The rise of the broker platform

Brokers that are serious about their businesses are also serious about technology; the past decade has seen a big shake-up in terms of what they demand in its functionality and many have become empowered decision makers.

Many senior brokers were hapless information technology buyers 10 years ago; often tied into software houses' arrangements, they complained bitterly about being mis-sold and overcharged. Yet invariably, they failed to make the most of their systems because they did not know how to use them.

Memories remain from the early 1990s of brokers that were proud not to have a computer on their desks: it was seen somehow as demeaning. They spent much of their time scribbling notes, passing them to their secretaries to transcribe. It was only when e-mail came along that the technophobes began to feel increasingly isolated.

Slipped disk

An inspector from Cornhill remembers a broker being sent floppy disks on a monthly basis from his software house containing motor quotes. He amassed many hundreds of these but had no idea that he needed to put them into his unused computer. Using glue, he constructed a bizarre office chair from them and today the question remains as to whether or not he has considered a career as the new Tracey Emin.

This past now represents another country and any broker that remembers those days must agree that progress since then has led to a wealth of viable technological options. If anything, it is the huge variety of choice that is now the problem. Brokers may well use a tried-and-trusted software house for their back offices but they can also use online facilities from newer providers. Also, many intermediaries are spending more on technology than ever before.

It is this spending, generating software houses' highly attractive revenues, which has led to the recent purchases of SSP for £198m and Open GI for £275m. In the meantime, Acturis has perhaps benefited from being a smaller operation, snapping up new broker wins eagerly from its larger competitors.

Brokers have plenty to think about because their requirements range from improving compliance standards to search engine optimisation - the latter being of increasing importance for many schemes specialists.

It is notable that greater numbers of brokers are taking an informed view when it comes to technology purchasing. Norwich-based Alan Boswell has its own in-house team led by IT manager Richard Hartley. The business has approximately 150 staff across its three offices and offers commercial lines (including schemes) and personal lines, as well as having a financial services arm.

Third-party advice

Hartley comments: "We have invested heavily in IT in recent years and have done the opposite of many organisations, in that we have brought our IT support and development teams in-house rather than relying on external organisations."

Hartley leads an IT support team of three staff, which is backed up by four developers working on web integration, online systems and customising its back-office systems. Hartley remarks: "We feel that having internal skills and resources allows us to achieve exactly what we want and respond quickly to what the business needs."

Once, brokers tended to stick with a single supplier. Today, they mix and match. Alan Boswell has a back-office system from Open GI but is involved in his firm's own development of other applications.

Hartley explains: "One system we use extensively is Citrix, which allows you to manage centrally but roll out applications to users anywhere and provide rapid updates. This has enabled us to very easily connect up new branch offices, such as the new business insurance centre we opened in Bury St Edmunds, and deliver all of the same functionality to remote users as they would have if they were in the head office. Citrix is also allowing more and more of our staff members the flexibility to work from home."

Open GI, formerly Misys (see Technology, p.12), has attracted criticisms from some of its users but has a large presence in the market. Hartley remarks: "To some extent, it is a case of 'better the devil you know'. There have been criticisms because some of the technology is not open; some of the core system is probably 20 years old, yet there have been changes for the better and, with the company now owned by Towergate, this could also be positive for the future."

Convergence

Hartley explains that Alan Boswell's approach is to use different applications and his in-house team facilitates integration. "We do a great deal of bespoke development on the system to aid workflow and handle our delegated schemes. We have also integrated several third-party applications, most notably the INVU document management product. We also use Open GI's Infocentre data management tool and their XML import tool (Xstream) both of which are enabling us to get data out of and back into the BROOMS system for reporting and publishing to the web and for e-commerce."

Alan Boswell's current projects include the integration of a cheque-printing solution, which will take a data feed from the Open GI system, create cheques and remittance advices and then write data back to the system once the cheque has been generated. "Because we specialise in schemes and have delegated authority on paying claims up to around £5,000, this will be a far more efficient way for us to do business," explains Hartley. He adds that a focus for the future will be to raise e-commerce levels, with more schemes going online and improved search engine optimisation.

Meanwhile, the leading software houses insist that they are ahead of the times and can provide total solutions for brokers. The broking technology market has always had cutthroat competition. Now, with the economy in a shaky state, the larger providers are emphasising the greater security that they offer.

There is no doubt that, in sales pitches, the bigger providers may well hark back to systems that have gone under (software house New Millennium Technologies and online platform 24/7 are ready examples) to emphasise how any provider needs to stick around and be financially secure.

Simon Hughes, sales and marketing director for Open GI, says: "The cost of the investment in new technologies and innovations isn't lost on Open GI. We spend in excess of £4m annually and we have the financial stability to sustain this. This isn't true of the whole software house sector, so it's important that brokers pick their technology partners carefully. One of the main challenges to innovation is whether or not the software house has the financial strength to invest in and sustain development. There are cases where some companies have ceased the development of a specific product because the funds are not available."

Although there has been huge contraction in the broker market, Hughes says that new systems continue to be sold: "Sales of new systems will often be based on the fact that brokers don't feel that they are getting value from their existing systems. In the online arena, this is particularly relevant. For example, we are often talking to brokers whose software house can deliver the quote technology but can't handle quote volumes online, so ultimately the innovation has failed."

Hughes insists that Open GI is also drawing ahead of the game when it comes to online development. Eaggregator, for example, allows brokers to achieve product listings with major comparison websites, including Gocompare and Moneysupermarket, and was launched last December. It has since secured 15 broker contracts.

Next generation

Yet, can an established provider be truly cutting edge? Transactor has been quietly gaining a name for itself as a new breed of software house. It describes itself as the industry's most functional and configurable insurance solution that integrates fully with all significant third-party applications. The firm's software caters for all insurance business processes from new business to claims, with a range of fully automated policy transactions available to the operator both in the office and on the web; there is also a full sales ledger accounts to trial balance. Furthermore, Transactor is scalable, supporting multiple branches, channels, brands, affinities, languages, and currencies. Users include niche motor broker Adrian Flux, as well as Heath Lambert, Jardine Lloyd Thompson and Caravan Guard.

The company has sharp focus and ambitious plans, even though managing director Ray Vincent believes that the broker market will shrink still further: "This is strong and vibrant channel and there are some very strong brokers but they are driving ahead and, in terms of technology, they want the next generation of systems and to make independent choices.

"Successful brokers are either high volume, more complex commercial or niche. And, while some say there are around 3,500 firms out there, I think this will reduce to around 2,000. We see probably around 500 potential clients out there that we could work with."

Vincent says that other software houses may claim to be open but offer limited flexibility. He comments: "It is more than about offering web facilities; you should be able to link-in seamlessly to a call centre and provide e-mail fulfillment as well as an SMS facility."

Vincent says that a number of schemes brokers could be doing more to work with aggregators: "They want to link up with intermediaries offering niche and business such as taxis, couriers and non-standard property. Brokers should see some aggregators as friends."

He adds that it is now possible for brokers to have their own aggregator facility. For example, Caravan Guard will be offering its customers a range of online quotes.

Vincent says that Transactor has spent over £40m on research and development and also has a New Zealand office that provides servicing during the UK's night hours for convenience. He remarks: "Brokers are nervous when it comes to a new system. They know that some other providers, such as NMT, ran out of money. Yet, if they stick in the same place, they are holding up their growth. I am convinced that modern brokers need to do their homework to look at the differences in what we can provide compared to the more traditional suppliers. They have to decide if they want independence and to move onto the next level."

Extra help

If a broker wants to invest in new technology then bringing on a consultant - and paying their fees - can prove valuable both at selection and implementation stages.

Mike Barr, managing director at consultants Watertrace, comments: "There are provincial brokers out there that need to change their mindsets. Products such as directors' and officers', employer's liability and public liability are available online and there is a degree of denial in saying the market is not moving towards this. A consultant provides valuable objectivity and can help a broker assess where there business is going over the next three years."

Watertrace was recently involved in consultancy work for Aon, assessing staff attitudes to and the implementation of the Ri3k electronic-placement facility and processes.

Although this related to the London Market, Paul Saffer, head of practice at Watertrace says that there were parallels with provincial brokers: "There is no point brokers spending a lot on a system and then failing to use it. Often, this is because they fail to engage the 'marzipan layer'. It is about winning hearts and minds. Namely, those at the top take the buying decisions but it is the middle managers that will be making most use of the technology and will most likely have responsibility for training."

Saffer adds that brokers should also face the fact that technology is largely about cutting costs, explaining that there must be careful analysis of what savings can be made against the cost of a new system: "Some brokers are not comfortable with the fact that they should be employing fewer people; that they may lose some for the good of the business."

However, Vincent adds: "Brokers must be looking to reduce costs. However, in reality, new technology usually means most of those who were doing low-skilled admin work can be moved into more productive, client-facing roles and generate more revenue."

Effort

Switching from one provider to another is always going to be a big deal, as well as a hassle, because of the inherent data migration issues. However, brokers can look to pep up their businesses by making use of the Imarket portal (although critics say that products have been slow to appear on it) and it is not the one-stop shop promised originally. Brokers may well choose to approach insurers individually if they feel that better deals can be obtained.

Otherwise, facilities such as Iprism do not involve an IT investment charge and provide access to a range of SME products online. Covers include buy-to-let, shops, offices, pubs, tradesmen, hotels and professional indemnity. Iprism chief executive Gary Burke comments: "We believe this offers more breadth than other providers and brokers can white label the system. However, although we are targeting all sizes of broker, we have found some smaller ones are not focused on online trading. They need to wake up because they risk their customers going direct."

Some systems have been providing solid results for years, such as QuoteMac from APC that continues to add new products, most recently one for restaurants and cafes. APC's underwriting director Ian Russell says: "We still have a few brokers faxing us, even though QuoteMac is probably one of the simplest systems to use.

"I will always think underwriters will start to lose money if they cut back on the phone service; you always get variables. I think a lot of brokers should be investing more in their systems and look for back and front office integration. Of all the systems I've come across, probably Acturis impresses me most and, with clients such as Oval and Smart and Cook, they must be doing well."

Lyndon Wood, chairman at Moorhouse Group, is behind another portal offering, Xbroker, which includes 15 online products with a number of exclusive offerings including small and medium enterprise cover and, most recently, a high net worth motor policy from RSA.

The stage could arrive where a broker's desktop is cluttered with various systems, which leads to questions as to whether or not users will really make use of them at all. This is especially problematic as, by switching from one platform to another, brokers are likely to have to re-key data.

When asked why brokers should use the Xbroker system in preference to Imarket, Wood comments: "The straight answer is 'I have no idea'. All I can say is that brokers want a panel of insurers, quick quoting, short questions sets, documents online, 30-day accounting, access to underwriters when needed, good commission rates and FSA compliance. Imarket is a great concept but it seems to be just that - a concept. It had and still has great possibilities but is now hindered by its own bureaucracy and that of third parties. Lots of publicity and advertising does not guarantee results."

Difficult

Wood adds: "Brokers are people of habit and struggle to adopt more than one system. More than one system can be impractical because of re-keying data, however, playing those systems to their strengths is a different matter."

Right now, the war to capture brokers with online offerings is in full flow. It is clear that, in recent years, far more brokers are taking their web presences seriously. The big software houses are aware of this and offer services to increase web profiles and online trading capabilities - but there are other players out there too.

Fusion Internet Solutions offers a range of browser-based services aimed at schemes brokers that want to improve their web capabilities. Director David Saul says: "We offer brokers soup-to-nuts web solutions and it is all hosted, which is far more cost effective. How many smaller brokers can really afford to have a team of three to five IT specialists in-house? If a broker has an idea for a scheme, tthen there is always the potential not to to sell it online." He adds that Fusion also provides its services on a pay-as-you-go model.

Meanwhile, Debbie Baker, insurance business director at Kewill, which provides technology that connects insurers to brokers, comments: "Many brokers now see the web as having enormous potential for them and there are some clever things happening., such as Ri3k in the London Market. For example, being able to present a risk to the marketplace and underwriters taking a share of this online shows the progress the industry is making."

Baker believes that Transactor is the one to watch and that one latest area to take off in terms of broker and insurer technology will be to allow customers more self-service facilities.

In the current soft market, many brokers are seeing their premiums shrink. They may well be asking themselves if greater spending on technology is the answer and, as some brokers surge ahead, it looks increasingly as they cannot afford not to.

ARNOLD FISHER - THE JOURNEY ONLINE

Arnold Fisher, a division of James Hallam, is a specialist schemes broker providing cover for travel agents and tour operators' businesses both direct and wholesale to other intermediaries. The business is poised to launch an online web-trading system using Sirius 21 - a part of SSP. Managing director Paul Anscombe comments: "Although we do have in-house IT experts within the group, a fully hosted option made far more sense for us as a niche business."

Anscombe explains that they brought in the services of a consultant to help them assess the market. "You could argue we could have done this ourselves but I disagree; it was well worth having an expert to ask the most pertinent questions and help us decide our options." Arnold Fisher engaged Lloyd's specialist James Christopherson to advise them. Anscombe says that Arnold Fisher is determined to get the project right: "We're spending a lot on systems but I think this is absolutely essential as any broker that doesn't may even risk their survival. There are no short cuts."

According to Anscombe, Arnold Fisher went out to the whole market to meet many providers face to face. He comments: "We wanted to offer a broker site and a direct-to-customer site but keep them quite separate and have straightforward and efficient full-cycle online trading capabilities. I am confident we will achieve this when we launch at the end of September."

Kevin Child, divisional director at Sirius 21, comments: "The fully managed solution for brokers that want to trade online makes sense and saves them money and, if they are working with us, we are one of the biggest and most financially secure providers."

TOWERGATE - LANDSCAPING THE FUTURE

Towergate is rarely out of the news because of its aggressive acquisition strategy, including its purchase of Open GI.

The broker's underwriting side had accumulated 30 disparate insurance administration systems and created a standardised technology platform in association with technology house RDT to enable a streamlined workflow.

According to Jon Mitchell, senior project manager at Towergate Underwriting: "Many islands of information were residing in different legacy systems, with very little integration to offer the company a single view of its customers, a single business process or an end-to-end view of everything that the business needs to address."

He explains that several of these legacy systems struggled to deal with the demands of the company's continued business growth. "When there are lots of small systems trying to handle large volumes of business and new channels to market, they hold the business back. We knew the company had the ability to increase dramatically the volumes of business in each underwriting division but this was proving difficult. We were keen to standardise on Microsoft technology as our IT staff are familiar with Microsoft and we had already developed some of our major broking platforms on the Microsoft stack."

With Landscape, Towergate is working to develop an underwriters' toolkit, a solution to address effective workflow management with processes that support business agility by enabling accessibility, speeding up the time-to-market for new products and lowering costs. Towergate is currently migrating various underwriting platforms onto Landscape in order to integrate the entire business.

Mitchell adds: "Building insurance products can be a complicated business and the ability to do this ourselves, quickly and with flexibility, is enormously attractive. As Towergate grows, the scalability of Landscape means it can continue to integrate new acquisitions and streamline processes. One of our teams involved in the roll-out programme has put a stake in the ground and said they want to find a 20% operational saving just from implementing Landscape."

RDT's chief executive Mark Bates said that Landscape is equally suited to larger brokers that have made numerous acquisitions and want to overcome their legacy problems.