With very few exceptions, businesses are digitizing. Not to be left behind, this includes the world of insurance, where agents, brokers, and carriers are entering a sort of arms race. However, organizations that embrace technology early will be rewarded with unheard of transparency into new opportunities to grow their bottom line.
But many brokers remain reluctant to entrust their company to new technology. This feeling is sometimes rooted in wanting to maintain the status quo under the adage, “if it ain’t broke, don’t fix it.” So while nothing is broken per se and Insurtech funding reached $5B just a few years ago, traditionalists will be passed by an industry quickly speeding up.
Digital Transformation Builds Stronger Bridges
There will always be leaders who cling to their current ways. And then, we have executives who believe technology will advance their objectives, but at the price of sacrificing long-standing relationships. As it turns out, such fear does have some legitimacy, as social media has shown, especially among younger generations where 80% of communication is now non-verbal.
However, a properly deployed digitization strategy will have the opposite effect. Organizations can peer into current and prospective relationships in real-time using technologies such as application programming interfaces (APIs). Instead of hindering relationship building, the clarity and speed digitization delivers allow brokers and carriers to see developing opportunities and challenges long before they otherwise could.
Where to Focus Your Digital Transformation
Digitization applies to nearly every aspect of a company’s operations. For many brokers, internal digitization has already been implemented. Accounting processes, human resources, and client management software are often the first systems to reap the benefits of technological advances.
It makes sense that internal systems are commonly digitized before external systems as the perceived risk and reward are measurable across comparable industries, including banking and finance. Technology companies are also well established in this space as their solutions are easily transferrable from other businesses.
Brokers today will find only a marginal competitive advantage focusing on internal digitization. Instead, brokers seeking to become leaders in their space must look to digitize the two relationships where digitization has yet to scratch the surface – carrier and agency partnerships. Specifically, brokers need to seek ways to integrate their systems with key relationships.
Through carrier integration, brokers can quickly identify the best solutions for their insureds while building a balanced book of business. Automating the claims handling journey for brokers and insured can be reduced by 30%. Integration between brokers and agents yields similar capabilities by streamlining submissions and identifying untapped opportunities.
Conceptually, the benefits may seem obvious. However, the hurdle many brokers have difficulty overcoming is developing a methodology to monitor the success (or lack thereof) of how such integrations impact their relationships. After all, you cannot improve what isn’t measured.
Monitoring Relationship Health
If there is one area the insurance industry excels at, it is quantifying data into valuable forms. By its very nature, digitization affords the ability for brokers to compile and analyze data quickly. There are several key metrics to gauge the health of a particular relationship.
Carrier Relationships – Your carriers work with many different brokers. With so many contacts, it will be up to you to set the standards that will define success. The following metrics need to be tracked to improve your overall digitization strategy.
- KPIs: Digitization will increase your organization’s customer retention numbers, the average premium per client, and new policies placed in force.
- Quoting Speed: Your clients need the right coverage quickly. Creating a direct link between brokers and carriers will reduce the time between submission and quote by a significant factor.
- Binding Speed: Receiving quotes quickly only matters if you can bind promptly. Digitization can streamline the binding process for all parties involved.
- Submission Efficiency: The more times you handle a submission file, the less profitable it becomes. Integration reduces the number of touches necessary to quote and bind coverage accurately.
- Client Connections: Reducing the number of contacts with insureds increases efficiency for both sides. Additionally, digitization can track the types of questions clients ask to deepen your expertise in a particular niche.
Broker Relationships – Brokers often bend to the needs of account servicing professionals. However, digitization will provide exponential benefits for brokers who have buy-in from their agency partners.
- Submission Efficiency: Broker submissions come in a variety of forms. Integration brings with it standardization. Each submission can be built in the most efficient way to evaluate, quote, and bind.
- Appetite Identification: With standardization comes the ability to quickly evaluate opportunities and pursue the most lucrative exposures. In most instances, this can be accomplished automatically or by processing personnel.
- Claims Management: If brokers are involved in claims handling in any fashion, digitization will assist in meeting the demands placed upon you by both your broker partners and insureds.
Relationships of the Future
The digitization of insurance has already begun. It is no longer a matter of “if” integration between brokers and carriers will occur, but rather “when.” The competition is preparing for the next era, including seamless integration between key partners. Brokers who lead the transformation will be the brokers who lead the next generation.
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