Focus - technology: Taming the tide of systems improvement

When it comes to technology, insurance brokers are no different from anyone else: there are two clear camps. On one side stand those that welcome advances in IT with open arms and use them to improve both their personal and professional lives. On the other side are those for whom IT is a necessary evil; the electronic revolution may be something they have to live with but it is not something that they feel inclined to engage with or relish.

What is perhaps most interesting is that, despite these simplified polar responses to technology, more insurance brokers do not put their personal reservations to one side to engage wherever possible for the benefit of their businesses.

Across broking and the wider insurance market, there is a significant disparity between companies that use IT to something approaching its full potential and those that fail to really generate substantial benefits for either themselves or their customers.

Making time
For many brokers, there is a genuine problem in taking time out of their everyday commercial activities to fullyassess their business processes to examine where they could be improved by IT.

Michael Graham, sales and marketing director at software house Sequel, comments: "I think the smart firms do work out exactly what they need in terms of IT but, often, businesses find themselves so busy with the day-to-day routine that it is difficult. Individuals and businesses often become creatures of habit and so it does take a different approach for someone to step outside of that mindset to ask if they are best served by the processes they use everyday."

Graham does not necessarily buy the argument that smaller businesses lack the resources to look at their own set-ups and introduce changes where necessary. He adds: "It is not a question of size, it is one of culture and personality."

For brokers keen to make IT a stronger force in their organisations, looking at how they work and the processes they use will allow them to see where aspects of their businesses could be automated.

If brokers feel that conducting this analysis is something they will struggle with internally then there are many outside consultants that can step in. Perhaps the most cost-efficient option would be to ask IT partners for a health check on the way in which they use their software.

Simon Hughes, sales and marketing director at Open GI, says: "An effective IT system is often the single biggest investment a broker will make. Therefore it's imperative that the system is used to its full potential. Most brokers use less than 25% of their system's capabilities, which is why we hold regular product clinics to help brokers get the best out of their IT investments."

Similarly, Simon Ronaldson, sales and marketing director at Acturis, adds: "We have a free service called ‘broker staircase' under which we analyse what an individual broker does well and not so well on their systems; we then help them move up the staircase. This is a very productive process for both the broker and our understanding of what our broker customers are looking for in a system."

Open GI and Acturis are not alone in looking to work with brokers; the challenge for intermediaries is to actually make contact and engage with these services.

It might cost a few days out of their schedules but if it speeds processes or automates them altogether then the return will be well worth the effort. So what sort of areas should brokers investigate when it comes to putting their IT to better use?

Rationalise
In the first instance, every IT project must be able to stand on its own two feet by benefiting the business that it serves. Graham comments: "The primary area is in making sure that any use of IT has a business-led approach. Not maintaining a business focus is often the first mistake that any firm makes and you do not want
the IT tail to wag the business dog."

In the second instance, brokers must look at the number of IT systems they are using and whether or not they are integrated. Graham adds: "Rationalisation of systems is important. If you have data in different places in lots of different systems then the single biggest gain would be through rationalising all of the data and structuring core business records in a single place."

Rationalising different systems takes time but the impact it can have on a business can be carefully managed and controlled through step-by-step planning.

In the same way a broker would control the logistics around moving offices, transferring data can be done in such a way as to minimise the impact it has on a firm's ongoing activities.

Graham says: "You need to prepare and understand the reasons for moving: that you will end up in a different place and that people will be doing different things in a slightly different way. The better firms can prepare the faster they can carry out the transformation."

For brokers with upwards of 100 people looking to rationalise their IT and transfer data accordingly, Graham says they should reckon on a timeframe of around six months, although individual projects would require discrete timetables.

Once a broker has rationalised the storage and structure of its data, it can then start using that data to good effect by improving the processes surrounding collection and management of that data.

Brokers will know themselves how easy it is for them to get a single view of their customers, the policies they hold, the services they use and the claims they have had. Equally, brokers will know how easy or difficult it is for them to get hold of management information that can help inform their decisions for the future.

Some will be able to get what they want almost at will, while others will spend 80% of their time trying to collate the information they need, leaving only 20% of their time to actually analyse it.

On producing management information, Kevin Child, director at SSP, asks: "Are you using your data to cross-sell? Are you aware of the potential of your data to market your business and introduce attractive products to customers?

"There are reporting tools on administration systems that will let brokers produce cross-selling reports and prospect reports. There are data mining tools allowing brokers to say ‘show me everyone that has one of x but not one of y,' or ‘show me everyone that has been on the books for five years'."

Child says that these tools allow brokers to understand their customers and their businesses better and in turn do a better job for both parties. It's just a question of
encouraging firms to use the computing power that sits underneath their fingertips.

Evolution
However, IT is not all about producing management information: there should also be a focus on using it to speed and improve the way in which a broker actually conducts its day-to-day business.

Document management is a perfect example of what IT can do for businesses on a daily basis. How, for example, does a firm deal with the post it receives and the documents it creates? Is post opened and handed out manually and are documents printed off and put in paperbased client files?

In the case of the post, it may take someone just as long to scan and upload it to the administration system as it does to hand it out to the individual recipients but,
thereafter, how much easier is it to access electronically? How much easier is it for staff to lay their hands on specific pieces of correspondence while speaking with clients on the phone?

As Child says: "Don't forget that, when it comes to scanning the post for example, it is just the first touch of that correspondence and there are likely to be many more in the future."

Equally, producing electronic documents removes the need to print and store them and makes access a lot easier for staff across the company.

The change of law on using electronic certificates for motor insurance has huge implications for brokers, on which Hughes comments: "Many of our brokers, for example, are taking advantage of our document fulfilment offerings in light of recent changes to motor insurance certificate legislation. These allow documents to be sent electronically, saving thousands of pounds a year in print and postage costs."

Debbie Baker, sales and marketing director at IT firm RDT, agrees. She comments on the personal lines market: "I think that the next big space [in personal lines] will be the ability for insurers to give customers their documents electronically rather than having to post them."

Once a broker starts thinking in electronic terms, it then becomes much easier to analyse the way in which business is done and the actual activities that could be automated.

Rather than move individual functions to an electronic footing, it is possible to set up chains of activities that can be automated, something that can then create savings in time and resources.

Child explains: "You could put together what we call action lists. If you are chasing a declaration then you might have to write a letter, make a diary entry to remind you to check that you receive it and send a reminder letter to say that you haven't got it. There is a whole process that has to be followed and you can glue all of that together. Instead of doing each task manually, you can automate the chain so that if the first thing doesn't happen then everything else that follows it happens automatically."

Once a business has improved its automation processes, it becomes easier to run exemption audits by which brokers can see exactly the processes that were followed on a particular piece of business, where there are problems and where there needs to be improvement.

In the current and ongoing regulatory climate, this is increasingly important for brokers, while highlighting problems effectively will also give them an important insight into how smoothly their operation is running and where it needs to be improved.

SME opportunities
Developments in the personal lines market have shown brokers that if they want to
compete in this sector then they need to trade electronically. Many were slow to grasp this and it has seen them lose ground to direct writers and aggregators.

Now, as the small and medium-seized enterprise market begins to automate itself, the opportunity exists for brokers to take advantage of electronic trading and ready themselves for it in the months ahead.

Child accepts that there have been some false dawns in terms of electronically traded SME business but says: "I think the other big area is SME. It has taken a while to get out of the starting blocks but it is up and running now.

"Insurer portals such as imarket and the ability to e-trade already exist in this sector
and I think brokers should adopt this approach if they haven't already looked at it seriously. If brokers adopt and use the online commercial trading platforms then
they will only key the data once."

Despite concerns at the lack of online product and provider choice, Child says that the market is moving very quickly. Hughes agrees and comments: "The current focus in terms of efficiency improvements has to be SME. Brokers are realising that they need to automate this part of their portfolios if they are to survive and software houses are working hard to close the gap between commercial and personal lines.

"Technology has transformed personal lines broking and, in my view, we're on the
verge of seeing, finally, the same revolution in commercial lines SME."

It is something that brokers use everyday, yet not all are making the most of what they have or are investigating where they could push their boundaries further. Taking the time to do so will improve performances in the short term and put brokers on an improved footing and further ahead of the competition.


Motor insurance certificates
Legislative changes that enable electronic delivery of motor insurance certificates to
customers came into force on 30 April 2010. A certificate can now be issued as an e-mail attachment or accessed using a website.

According to the British Insurers Brokers' Association, this will ensure that motorists have quicker access to their certificates if they need it and reduce the environmental burden of 40 million hard copy certificates being printed and posted each year, saving 2,280 tonnes of CO2 and up to 9,750 trees each year. Biba's sentiment is backed by others such as Open GI, which welcomed the changes and claimed brokers could save tens of thousands of pounds each year by installing document fulfilment solutions to carry out the task.


Brightside Group
The broker has already had a massive push on improving the quality of data it holds for customers and the number of e-mails it collects to help improve the efficiency of future communications, according to Martyn Holman, head of UK broking. He says that the new legislation around electronic certificates will make a big difference and adds: "Now there are new regulations in place around e-mailing insurance certificates, we are looking at changing a lot of our processes to accommodate that, although at the moment we are still sending out a lot of paper."

Elsewhere, the business is involved in a rationalisation-and-development IT programme, on which Holman explains: "We already have our own software and development business within our e-insurance services division, which links the system for our e-car and e-bike internet products. We have been trying to get that much more closely integrated with our back office within Brightside, which is fundamentally Open GI. We have been working to try to ensure that data is a bit more readily accessible across the whole group rather than sitting in silos. Where we have our main broking operations working on different platforms, it presented a problem because when we were talking to a client we did not know if we had sold them a van policy and a liability policy and a private car policy but no household. We are now moving to get to a point where anyone in any of our broking units can readily see what they have with us already."

Holman says that these changes will drive significant improvements for the broker and help it take advantage of the large data sets it controls.


Towergate Risk Solutions
David Partington, broking sales and marketing director at TRS, says that the firm has been trying to extract the value from its data by pulling all of its businesses together electronically. He comments: "We use Microsoft Dynamics as our customer relationship management tool. All our new opportunities go onto it and we use it to identify and diarise opportunities, as well as to record the results of them.

"Because we operate across 60 businesses, the Dynamics system shows us, in one place, where we have multiple policies for that same customer. All 60 businesses feed into this: it was a hell of a build.

"Our data sits in a client data warehouse and then feeds into Dynamics. We are about halfway through that at the moment. We have had the ability to have this single view of the customer for about 18 months but it is only now that the individual businesses in the organisations can use this for themselves. In the past, individual firms would have needed to crossreference our data through a central marketing team if they wanted to use it but now they have access to it from their own offices. It is a work in
progress and we are nowhere near cracking it yet."

Partington says there is a huge opportunity where businesses can harness data to do effective propensity modelling. "We should be able to identify what products and services people are likely to want to buy and we should be able to very effectively market them to those customers. At the moment, we have had to operate as most brokers have on a basis that we will try to cross-sell quite a small set of products to customers.

"Not only will we be able to go to them in the future with a broader range of products, we will also be able to approach them at the right time. We will be able to improve the return on spend on our marketing campaigns because we do not need to market to as many people and we will also be able to improve our strike rate by marketing more effectively. We should also be able to look at who people insure with and what sort of products they buy; this will help us do a lot of work around product development."

Source: Professional Broking – July/August 2010