In Depth: The fruits of the future: The benefits of technology

Software updates have become part of daily life – a necessary process to make sure our technology is running at its optimum standard. These small, incremental changes, while a slight nuisance at the time, are future-proofing software systems, making them more effective for longer.

The technology is there to move us forward, with greater flexibility than it has in the past. So, why haven’t we, in the insurance space, followed in the footsteps of Microsoft, Apple and Google, where future-proofing software systems is second nature, leaving the likes of insurers and brokers significantly behind the software curve?

One reason is the disconnect between the technology firms at the forefront of advancing software and the insurance industry itself.

Mark Rigby, chief executive of iRevolution, explained: “Insurance and financial services are shrouded by regulation and underwriting – broking is a dark art to those who are more tech-minded. Real advancements are made when the two industries come together.

“Software houses ultimately control the market for most brokers. Many brokers cannot afford in-house development teams to build their own platform, and even if they did, getting insurer backing and integration into their platforms would be incredibly difficult.”

Another factor is that brokers do not have the resources in place to keep up with all the latest changes.

Barriers

Paul Cunniff, chief financial officer at Freeway Insurance, said that this is a huge barrier to delivering change.

He said: “Insurance software is expensive, requires dedicated management resource and project management resource, then add into the mix that you won’t always get it right first time. Not having the internal skill can also potentially persuade a board not to invest.”

Furthermore, with the role aggregators play in the insurance world, the ability to trade online is essentially outsourced and leads are generated through partner channels.

He said: “This allows you to integrate legacy systems with these platforms, giving a view that you are further technologically advanced than in actuality.

“Typically, insurance systems are back-end integrated with services including data enrichment, EDI exchanges, traditional SQL
reporting, which can make a significant system change seem like too big a project to undertake.

“With key services significantly intertwined, it can seem like too daunting a project to undertake, particularly with the adage in mind – if isn’t broken, don’t fix it.”

“The challenge is getting businesses to invest in it and draw a line in the sand with their old legacy solutions”, added John Garrard, managing director at Wrapper Insure.

He explained: “The objections are always, ‘it’s expensive’, ‘it requires significant capital outlay along with significant specialist resource’. These three hurdles slow the rate at which businesses can advance.”

Awareness

Collaboration between brokers and developers is one pathway to solving this problem, with regular partnerships potentially advancing the software produced.

Rigby added: “Another lesson that the sector can learn from other industries is how essential it is to make people aware of what the concept of insurance actually is.

“This is because a significant number of people do not fully understand the risk of being uninsured or the benefits being insured offers.

“The key here is to invest in technology and collaborate with each other. The more insurers work with brokers and developers, the more advancements can be made.”

“Ecommerce is a key area to learn from,” added Cunniff.

He said: “Usually they are first adopters of online technology because it is their business. If an e-tailer is doing it, look how you can use that technology to support your broker business.

“This could be something as simple as how do I understand my customers interaction with my site, what are their buying patterns, when do they come back to my site?

“All of these points can be used to understand the best point in time to attract a new or existing customer to your site.”

In addition, Cunniff said learning that key pinch points from a customer’s point of view, can lead to simple innovation rather than thinking whole technology stack rebuild.

He said: “Learning from failure is key and that is why testing is so relevant in software testing. Software, 99% of the time fails first time. You can fail and learn from it, which then leads to success as a result of that failure.”

Partnership

Brokers, however, should not expect to do this alone as software development is a very different discipline. The key is to find the right staff or partners whose expertise you trust, said Rigby.

He said: “We have built a team of staff from a variety of backgrounds who come together to discuss new ways of doing things or suggest improvements.

“We try to allow involvement at all levels, from executive to front line staff, to ensure that the solutions we create are going to add real value to both staff and customers.”

He argued that it is almost impossible for a broker to future proof and change technology without software houses. Rigby said: “The easiest way would be to speak to and put pressure on the software houses to move with the times.”

Garrard agreed that external help was needed, saying that brokers are experts in insurance, not technology. He said: “I would always recommend sourcing external support should brokers not feel comfortable making such business-critical decisions.

He added that brokers did not need more education on the topic. Instead they needed reassurance from “the right technology partner who understands the business goals and objectives”.

This would be determined through a scoping exercise based around “where the business is now and where do you want to be and everything in the middle”.

Garrard commented: “Think about your customers, your own people/employees and all the processes that make your business tick.

“This all must be included within your scope. Once you have this powerful scoping document, then you are ready to go to market and find a solution that meets your needs.

“Ask colleagues or business contacts and find out what the latest start-ups are using as they literally have no legacy systems to compete with and will be utilising the most cutting-edge solutions.”

Challenge

The marketplace is being challenged by new entrants, new brokers using the Insure-Tech badge, launching new approaches to delivering insurance by an app, through chat or via a portal, Cunniff added.

Additionally, many brokers are offering a contact centre as the only way to contact them. Cunniff suggested: “This would suggest that it is the new entrants that are investing in technology, rather than the existing players in the marketplace.

“Investment in technology, in a regulated industry, supported by lead generation sites that guarantee leads, with loyal existing customer bases will add to brokers potentially not feeling that there is a need to do things differently and maybe even a fear of changing.”

Rigby also believes that education can come via awareness of what others are achieving in the industry. He argued that more transparency between brokers would benefit the industry hugely and allow collaboration on key development areas.

Rigby added: “Brokers need to see wins! It’s essential to see the technology working in practice and trust the process. Not everything will work out but with testing and buy-in from staff and customers, the right tech solutions can be incredibly fruitful.”

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